Going through a divorce is often a stressful and emotional process for a lot of people in California and elsewhere around the country. It can be difficult for individuals to make sound decisions about splitting assets, but failing to do so can leave them in disastrous financial shape. People who are going through a divorce should pay close attention to all the details and make sure they fully understand the ramifications of their decisions.
One of the ex-spouses may want to keep the family home after a divorce. If both parties contributed to paying the monthly mortgage, the house payment may become too much of a financial burden for one person to handle. On top of the monthly payment, the person that gets the house will also be responsible for additional expenses, such as home maintenance costs and taxes.
If a spouse has the choice between a bank account or a 401K plan, he or she should choose the bank account. Most individuals get taxed when they withdraw funds from a 401(k) plan, but there no taxes are incurred for taking money out of bank accounts.
When one party owns a 401(k) plan, his or her ex-spouse will need to get a court order called a Qualified Domestic Relations Order, or QDRO. It enables the ex-spouse to be able to access a portion of the 410(k). A QDRO also prevents an ex-spouse from having to pay an early withdrawal penalty.
The ex-spouse who receives child support should also take out a life insurance policy on his or her ex to guarantee financial security for his or her children. If the party that provides child support dies, the funds from this policy will replace the payments.
In order to experience an amicable divorce, each spouse should hire a family law attorney. These lawyers may be able to help a divorcing couple to resolve issues pertaining to property and assets. Legal professionals may also be able to help a couple agree on child support, child custody, and visitation.
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