Steps to Ensure Your Financial Stability After Divorce

When going through a divorce, asset protection and financial planning are key steps to securing your future. Whether you’re budgeting during divorce or dividing your assets in mediation, the goal is to create a clear, sustainable financial plan that supports your new chapter in life. By taking early proactive steps you can protect your financial well-being during and after divorce.

Key financial considerations

The first step is to establish a plan for your new financial future. Setting clear financial goals and priorities at the beginning can simplify tough decisions later. For instance, do you want to retain ownership of your home or exchange it for another asset? How will you manage any joint debts or loans? 

If you share a joint bank account with your spouse, it’s important to open a new account in your name as soon as possible. This is particularly important if you were not the primary earner or were a stay-at-home parent in your marriage. Having a personal account helps you build credit independently. Get a copy of your credit report and monitor activity.

As for asset division, California is a 50/50 state when it comes to divorce. This means all assets and debts acquired during the marriage are deemed community property and generally divided equally between spouses upon dissolution. This includes income, real estate, personal property, and debts. However, property acquired before the marriage, inheritances and gifts to one spouse are considered separate property, also known as non-marital property, and not subject to division.

Identify which assets are yours, such as inheritances, gifts, or items you owned before marriage. Knowing which debts you might be responsible for after the divorce can help you plan for their repayment. 

Don’t assume your retirement accounts will remain yours during the divorce process. In California, these are also considered community property and may need to be divided equally. 

If you are seeking spousal support and/or child support, consider mediation before litigation. Mediation tends to be much less costly than litigation. However, sometimes litigation is unavoidable. In these cases, it is essential to hire an experienced divorce attorney. 

Post-divorce financial planning

It is wise to create a new financial plan after a divorce; consult a financial planner or tax accountant about a post-divorce financial checklist. The end of a marriage can bring economic challenges but prudent steps such as budgeting during divorce, managing expenses and rebuilding credit can make a significant difference. By giving proper consideration to financial planning, you can transition smoothly as you move forward from divorce.