When people decide to divorce, they often think about the emotional and social implications. They may have sad or angry feelings about the ending of their marriage. They may mourn for the time they’ll miss with their children or worry that people will judge them. One of the last things people may think of is how it will affect their finances.
Unfortunately, divorce has the potential to significantly and negatively impact anyone’s finances. California spouses have to determine exactly how to split their assets, which may lead to serious disagreements. Many with accounts once jointly owned may now need to separate them, which can be daunting. Fortunately, experts have advice if you find yourself wondering about this very matter.
The first steps to protect your finances
One of the initial recommendations is filing a document called an automatic temporary restraining order. What this does is prevent either spouse from removing the other’s name or any money from joint accounts. The idea behind an ATRO is to protect both you and your spouse from changing the other’s finances.
Living here in California has its own set of indications in divorce proceedings. This is a community property state, which means that a court could determine any and all financial accounts as marital property, even if only one of your names is on the account and only one of you uses it. That makes it even more important that you don’t attempt to remove your spouse’s name or take money from the account, as the court could compel you to pay that back.
Managing joint and separate accounts
An attorney can help you figure out which of your accounts are joint or separate property. He or she may even think of possible joint accounts you haven’t considered. If an account is indeed separate property, but your spouse’s name is on it, there are different methods of taking your spouse’s name off the account, depending on the particular account and where you are in the divorce process.
Some accounts, like an employer-sponsored retirement account, will require a qualified domestic relations order to remove your spouse’s name. You may have to wait until your ex-spouse has removed his or her share as outlined in the order. In the case of IRAs and HSAs, they require a transfer incident to divorce and possibly other divorce documentation. In any case, consulting financial and legal professionals is a good idea.
If you have questions about divorce and your finances
Finances can be difficult to understand and manage in the best of circumstances. In a divorce, the matter becomes even more tricky. The best course of action is to talk to an experienced family law attorney who can guide you through the entire process.