Palmer Rodak & Associates
Palmer Rodak & Associates
Certified Family Law Specialists State Bar of California Board of Legal SpecializationServing your Community for 19 Years
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What financial mistakes are common in divorce?

With family vacations over and children settling back in school, many couples across California are filing for divorce. In what has been dubbed by some as divorce season, the back to school period routinely sees an uptick in couples choosing to break up. If you and your spouse find yourselves in this position, there are some financial missteps you should avoid.

According to CNBC, the handling of the family home in a divorce can have a huge impact on your financial outlook. Many want to keep the home for many reasons including consistency and stability for the children or holding onto happy memories, but it is imperative to do so only if it makes financial sense. While a home has value, there are also costs associated with its maintenance, which means that when assets are being divided up, an investment valued at the same amount as the family home on paper is likely worth more in reality. Keeping the house may also not be possible if you cannot afford the mortgage payments and costs of general upkeep.

Retirement savings are another hotspot for financial mistakes in divorce. The savings in a 401(k) account operate under their own rules, and unless you understand them you could end up with a hefty tax bill--early withdrawals from these accounts come with a 10 percent tax penalty. This penalty can be avoided by getting a court order, also known as a qualified domestic relations order, to be able to take the money without the extra tax, but unless you roll it into your own retirement account within 60 days you will have to pay income tax on whatever is withdrawn.

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Palmer Rodak & Associates
Certified Family Law Specialists State Bar of California Board of Legal Specialization

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