Divorce can take an emotional and financial toll on families. Once the decision is made to end a marriage, it’s essential to prepare your finances for what your budget will look like when you begin your new life.
One of the most important steps is finding an attorney who understands California’s divorce laws and avoiding the well-intended advice of friends and others who may have gone through the process themselves. There is no one-size-fits-all divorce, as every case is different.
Tips for preparing for high-net-worth divorce
Once divorce becomes the only option, there are several steps you can take to prepare your finances, including:
Track expenses: Knowing your current income and expenses will help you build a post-divorce budget. It’s also essential for your attorney and the judge in deciding how to distribute assets and whether to award child support or alimony payments.
Gather documents: Financial records are vital for showing the economic status of a marriage. Gather several essential documents, such as:
- Checking and savings account statements for the past year
- Retirement and investment accounts
- Recent pay stubs
- Mortgages, auto or personal loans
- Credit card statements for the past year
- List of assets acquired during and before the marriage
- Income tax returns for the past three years
Hope for the best, prepare for the worst: When divorces are amicable, both spouses generally willingly share information. However, in an adversarial situation, one spouse may not want to share financial details. Gather the necessary information before filing, if possible.
Avoid big financial decisions: Changes to beneficiaries, retirement accounts, wills or other financial documents during the divorce process could work against you with the judge.
Control spending: Spending more money than usual from an individual or joint account in the weeks or months before your divorce could hurt you when a judge distributes marital assets. Both spouses should be honest about all expenses during that period.
Seek advice from an attorney over California divorce laws
California is one of only nine community property states, meaning both spouses will equally share all assets acquired during their marriage. An experienced family law attorney can help you prepare for your financial future by protecting your financial interests to reach a fair settlement, or in court if litigation is necessary.