October 24, 2013 /24-7PressRelease/
-- When embroiled in the midst of a divorce, emotions can run high and make it hard for California spouses to make wise choices about their property division
or future estate and assets. It is important to exercise caution and learn potential pitfalls to avoid the unnecessary loss of assets for now or down the road.
While couples in their 40s, 50s and beyond may be focused on retirement during a divorce, even those in their 20s and 30s should remain aware. Following some simple steps will help you maximize your long-term financial viability and prevent additional regrets.
If you have retirement or pension plans that will be split in your divorce, it is important to note that there are state and federal rules concerning how
and when to move money into or out of such accounts during a divorce. Varying from these boundaries can leave you with large tax and penalty bills that can dramatically eat away at your savings and investment.
A home is not always the wisest investment
Conventional wisdom has raised many of us to believe that home ownership is not simply something to be enjoyed today but is one of the best investments that a person can make. While this may have been true at one time, it is not always the case.
When considering your marital property distribution, the value of your home is only one component to the overall picture. A home will have ongoing expenses tied to its ownership. With that in mind, a home and a retirement account both valued at $300,000 for example do not necessarily represent the same long-term benefit to you.
Certainly the option to keep a house during a divorce may be due in part to a desire to maintain consistency for children but if that is not a factor and you are solely making a financial decision, you may wish to consider other options.
Qualified Domestic Relations Orders can help
Some asset transfers during a divorce require the use of a QRDO but this handy document can be used for other assets even when not required. The big benefit of doing so is that you ensure that all entities, such as the IRS or the California Franchise Tax Board clearly know that the transfer of the assets covered in the QRDO is related to a divorce and can protect you from having to pay taxes or other fees associated with the transfer of ownership.
Legal counsel is always advised
Some amount of loss is unavoidable in a divorce but some can be minimized by working with the right professionals. California is a community property state but that does not make property division or any other part of a divorce simple. If you are facing the end of a marriage, working with an experienced attorney can help you in the long run.
Article provided by Law Offices of David P. Schwarz
Visit us at www.davidschwarzlaw.com