The commonality of divorce has led many to infer that more than half of marriages don't make it, but other reports challenge this deduction. As per the Centers for Disease Control and Prevention (CDC), 3.2 unions dissolved for every 1000 people in 2016. Nonetheless, some experts dismiss the CDC rate claiming that states have more accurate data on marriages as compared to data on divorces. "The Coming Divorce Decline" study based on the CDC's American Community Survey (ACS) indicates an 18% decline in divorce rates in the past decade. These disparities notwithstanding, getting a divorce remains an ever-present reality that happens to even seemingly happy couples married for years.
Visible tell-tale signs that your marriage is in dire straits include money problems, infidelity, stonewalling, defensiveness, and a myriad of other issues. If your attempts to resolve things have been to no avail, going your separate ways could be the next best thing. Money remains a thorny issue even in happy marriages, and the situation can potentially worsen during divorce proceedings. San Diego Family Law Attorney understands that contemplating to end your marriage is not an easy step, and we have prepared this blog to help you get your finances in order.
-
Start Tracking Your Expenses
The idea of an impending disillusionment of marriage can be scary, especially when you were not very keen on monitoring the family's income and expenses down to the smallest detail. Knowing how much money is coming in, how much you are spending, and what remains is vital in establishing a suitable budget after divorce. More so, this clarity helps your attorney to plead your case, so you get a more favorable distribution of assets under California's community property guidelines.
Factor in every expense you incur individually and as a family such as household bills, groceries, childcare, transportation, entertainment, clothing, mortgages, tax obligations, etc. If you are unsure about past expenditures, turn to previous credit card and bank statements as a reference, so you capture all necessary expenses including vacations and one-off investments like buying appliances.
Bear in mind that circumstances will change after divorce and as the children grow older. For instance, if you took turns watching the kids to reduce childcare costs, this plan may not be feasible when you are living in separate homes. As well, expenses associated with raising growing kids morph into costs of raising older children, such as paying college tuition.
-
Collect Financial Documents
Planning your financial future starts with getting a good handle on what has been transpiring during marriage and backing it up with supporting documents. Request your bank for statements on every account you hold jointly (current, investment, retirement, etc.) over the past year. Do the same for credit card statements, loan ledgers for the mortgage and car, and income tax returns dating back a few years. Make copies of these financial documents and store them in a safe deposit box, your office, or another safe place.
California is a communal property state which means assets gathered inside marriage are subject to equitable distribution while both parties will walk away with assets they owned before the union. To this end, generate a list of assets and debts you come with separately and the ones accrued in the course of the marriage, so there is no confusion. Remember, regardless of who files the divorce petition, couples can move from being cordial to acrimonious as proceedings unfold, so clarity on assets and liabilities is of utmost importance.
-
Identify How Much Debt You Owe
Debt is a significant turn off for many people, and too much debt has contributed to marital woes so much that people opt out of marital unions when one partner spirals out of control. California law stipulates that assets (income, expenses, and debt) obtained in marriage but not after separation are community property and thus distributed equally. Debt includes income tax obligations are part of the debts you owe together, whereas separate debt is incurred before marrying and after separation.
In the latter scenario, partners are expected to handle debts independently without seeking reprieve from the other partner. Note the exact date of marriage and date of separation to avoid any confusion concerning communal versus separate obligations. Couples can divide debts and other assets equally – down in the middle – or they can liquidate assets split the proceeds after paying off creditors. Some couples, even out the distribution of common property by factoring in debt, so the spouse who absolves the most liability gets more savings.
We advise clients to be discerning with set-off arrangements as if your ex-partner defaults on loan for a car or other property under your name, this will inescapably hurt your credit score. You also need to sort out your debts into broad categories, each bearing matching legal repercussions. The three classifications of liability are as follows:
-
Secured debts
Loans with collateral attached to them, such as your home fall under this category. The most common examples of secured debts are mortgages and chattel loans on recreational vehicles, family cars, boats, etc.
-
Unsecured debts
These liabilities are not linked to any property like the primary residence or another asset. The most common unsecured debts include medical bills, credit card debts, and bank credit lines.
-
Tax debts
You owe taxes to the state or federal government, and this is paid by filing tax returns year on year. Couples get a tax rebate if they file jointly and this extends to same-sex couples as stipulated by the updated IRS guidelines. If you routinely filed joint tax returns, this makes you both liable for the full debt accrued so far until a legal separation and divorce take place.
-
Avoid Unnecessary Spending and Financial Decisions
Now that you have a clear picture of total family income versus outstanding debts and expenditures, the next smart move is to refrain from spending money wantonly. Nobody is upgrading their vehicle or taking an expensive vacation or feeding other big-spending habits. The family needs to live within their means to avoid racking up more debt as this will only complicate things once the separation and subsequent divorce are underway.
Also, bear in mind that once you file the paperwork, there will be additional costs such as hiring an attorney, renting a separate residence when the official separation begins, leasing another car, etc. Apart from keeping a lid on expenses, you need to avoid making significant financial decisions such as changing the next-of-kin to your assets. These assets could be a life insurance policy, car insurance cover, retirement benefits, and so on as these deliberations will be handled in by lawyers.
Policies and beneficiaries are yet another issue where many spouses go wrong. No matter how tempting it is to scrap your estranged spouse's name of these policies are, such actions will not amuse a family court judges, and they could hold you in contempt. San Diego Family Law Attorney highly recommends that you wait until you have the court's directive to change the beneficiary of your estate.
-
Separate Your Bank Accounts
Depending on how your relationship is, the breadwinner could use financial abuse as a tool to punish their partner now that the marriage is irretrievably broken. The household must run as usual, which means both parties are entitled to accessing the family income. If this arrangement is not forthcoming or your spouse is overspending on purpose, you may need a lawyer's intervention sooner. The court will determine how you spend money until receiving the final decree, and everyone walks away with a financial settlement.
Apply for credit cards under your name only and open separate bank accounts – at least checking accounts – until the divorce is over and you can separate everything else. If there is a standing plan for direct deposit of your paycheck, update your employers accordingly. Having an independent account and credit card helps you to start taking control of your financial future without having to deliberate on every expense. This newfound breathing room means homemakers can find work and start contributing while safeguarding this kitty from their estranged spouse.
-
Handling the Marital Home
As marital property goes, your primary residence is potentially the most valuable asset you have, and it is also where you have safely anchored for years. Couples may decide to retain the family home for the continued emotional and physical security of kids. It could be located in a pristine neighborhood in proximity to excellent schools and other amenities that add comfort to your life, and you don't wish to disrupt this.
This rosy picture may have to end depending on the prevailing circumstances where offloading the most prized material possession is the only way out of debt. You could also be yearning for a fresh start post-divorce and a thriving real estate market could mean you get significant equity. Before selling or attempting to buy out your spouse, consult an attorney to ensure this step is not breaching any laws.
-
Prepare Yourself for Battle
As mentioned previously, divorce proceedings could start peaceful only to have couples warring over money or other issues. If you are the one filing, expect your soon-to-be separated spouse to be upset and raise issues at every turn. They could be angry with you blindsiding them with papers, or they could be vindictive even when their actions during marriage triggered divorce. The toxicity inside your union will likely be apparent as you figure out how to part ways legally and in other ways.
Prepare yourself for this unfortunate scenario and take the necessary steps to shield yourself and the children, especially the young minds who may not understand how their lives are changing. Shun the temptations to beat yourself up thinking you are a failure; divorce is far from that. Making the bold decision to separate didn't happen overnight, and you deserve credit for recognizing things are not working as they should.
CDC data derives that domestic violence impacts more than 10% of the population (about 32 million). The majority of victims are women with more one to three million females reportedly battered by a spouse or romantic partner. A recent poll done by GFK Roper surmised 36% of participants cited physical and verbal abuse as the primary driver for divorcing. If your spouse has tendencies to throw violent fits, prepare your mind for more adversarial interactions when separation commences. Stand your ground and don't allow their intimidating tactics to affect your settlement.
-
Hire the Best Divorce Attorney You Can Afford
Even the most harmonious separations are not free of some level of deceit, and manipulation and naïve spouses can find themselves being taken advantage of financially. A divorce is a life-altering event for you and your children so you will need to prepare psychologically to avoid rude awakenings that may destabilize them further. You will carry on catering for every expense up until your children finish college, and this financial undertaking may become more overwhelming as a single parent. Therefore, it is vital that you make wise decisions, and this begins with seeking legal help.
San Diego Family Law Attorney has decades of experience litigating such cases where the stakes are high, and everyone wants to walk away with their fair share of marital property. A lawyer will examine your assets and debts meticulously and pinpoint any anomalies where your spouse could be trying to deceive you. Hiding wealth is one of the oldest tricks in the book, and despite your best efforts, an untrained eye might not know where to look. A reputable legal counsel has witnessed the crudest methods of hiding assets, and they will remain watchful to catch your spouse and report these matters to the court.
Technology is a useful tool in turning up hidden assets, and you can trust a great lawyer to leverage this to uncover any undervaluing of earnings, including secrets assets. You would be surprised to find a piece of property that your spouse has neglected to inform you about during marriage. Perhaps they invested some marital earnings in a startup that is now hauling in huge profits? Entrepreneurs are notorious for falsifying transactions, shell corporations, investing in volatile digital currencies, and so on.
Any of these tactics present an opportunity to misrepresent their earnings to avoid paying child and spousal support as they walk away with a significant chunk of property. Financial transparency may not have been your forte in marriage, but your future depends on it so engage an attorney at the onset; they can refer a financial advisor if necessary.
Find a San Diego Family Law Lawyer Near Me
In sum, preparing for divorce requires taking a detailed inventory of your assets and liabilities with the proper distinction of community versus separate property. The mention of divorce or any actions alluding to the demise of your union can elicit some undesirable reactions, including your partner’s resistance. Emotions run high, and you could be susceptible to less than stellar choices that will affect your family post-divorce. Contact San Diego Family Law Attorney at 619-610-7425 so we can start helping you protect your financial interests.
