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Financial preparation to deal with divorce

On Behalf of | Aug 27, 2021 | Divorce

Divorce can be a challenging time for people in California. While the personal and emotional effects of the end of a marriage can be substantial, there are also a number of financial and practical issues that must be addressed. Both spouses must become accustomed to handling their own finances and budgeting for the future as a single person, and the process of dividing assets can often be one of the more contentious parts of a divorce settlement.

Prepare to handle the family home

For many couples, the largest asset to deal with during property division is the marital home. There may be a range of financial issues addressed in the divorce asset division from handling the mortgage to distributing the burden of capital gains taxes when selling the home. If one spouse will keep the home, any existing mortgage will need to be refinanced in the name of the spouse keeping the home. It is important to obtain pre-approval and come to an agreement about how to handle the mortgage if the spouse planning to keep the home is not approved for solo refinancing. Changing the title and refinancing the mortgage should go hand in hand so that neither party is burdened with the obligations of ownership without the rights of owners.

Close joint bank accounts

Spouses may also want to prioritize changing their banking arrangements as they finalize their divorce. While both parties may agree to divide all bank accounts, both should make sure that all joint accounts are closed and transferred to one party. This includes not only the couple’s main joint bank accounts but also any credit cards or brokerage accounts with joint ownership listed.

Asset division can be a complex process and can involve a number of less prominent accounts as well, from health and life insurance to beneficiary designations. However, moving through this process can help divorced people to move forward to financial independence.