What are the financial impacts of a divorce? California couples who are ending their marriage should be aware of the financial aspects of the decision. Understanding how the divorce will impact their finances can help people to plan ahead accordingly.
One of the major issues in many divorces is determining which spouse will get the home and how the other assets will be divided. California is a community property state, meaning that people can expect that their marital assets will be divided equally between them. Hand in hand with the division of assets is the division of debts that arose during the marriage. Like assets, California law views debts accumulated by either party during the marriage to be the joint responsibility of both. The existing debts should be expected to be divided equally regardless of which spouse incurred them.
It is important to keep in mind that even if an agreement is reached in which one spouse agrees to pay a debt that accrued in the other spouse’s name, the creditor doesn’t care about the agreement and can pursue the party in whose name the debt is in if the other one defaults on the payments. Another issue to consider is the tax consequences of divorce. Different types of asset divisions have different potential tax consequences. Recent changes to federal and California tax codes have changed the taxation and/or the ability to deduct spousal support or child support. These issues must be thoroughly considered as part of the financial impacts of a divorce.
Child custody and parenting time and the division of property are the most common areas of contention in a North County San Diego divorce. All issues must ultimately be resolved before a divorce can be finalized. If you are concerned about the financial impacts of a divorce we invite you to contact us or call 760-389-3927 to schedule an appointment.