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Westlake Village Legal Blog

Lack of financial knowledge could lead to problems in divorce

Older couples are twice as likely to get a divorce than the same age group was in the 1990s. For people in California who have not been involved in managing the marital budget, it could be the first time in decades or even a lifetime that they have had to make financial decisions.

A study by UBS Global Wealth Management found that this is not uncommon. In its survey of 1,500 couples and 600 divorced or widowed women, it found that 56 percent of women allowed their husbands to make the main investment and financial decisions. This was the case for both older and younger women with 54 percent of baby boomer and 61 percent of millennial women saying they did not make the investment decisions in their marriage.

The divorce mediation process

California couples have the option of using divorce mediation in lieu of traditional divorce litigation. With mediation, the divorce process will be less expensive and take less time. Furthermore, each spouse could have greater control over the final agreement.

Because there is no formal discovery in mediation, preparation is limited. In many mediation cases, the mediator, the two parties and their attorneys will have a general meeting in the same room. The mediator will then explain the rules of mediation.

Tips for divorced parents to help children adjust

Parents in California who are going through a divorce may make the process more or less difficult on their children by following certain steps. They should keep a conversation going with their children to make sure they do not feel they are to blame for the split and to support their relationship with the other parent.

Parents should also strive for consistent rules between households. They should not criticize the other parent or use the child as a go-between, and if the child criticizes the other parent, it should be discussed in a neutral way. Children do not need to be dragged into conflict between parents, used as a support by a parent or filled in on the details that led to the divorce. Parents should try to present themselves as a unified front to their children. Speaking negatively about the other parent could be damaging for young children and may backfire as children grow into adulthood.

What are some pitfalls of rushing through a high-asset divorce?

One mistake that is common in Westlake Village area high-asset divorces is rushing. If you are getting ready to file for divorce and there is a large amount of wealth and assets involved, you cannot afford to make hasty decisions without considering the consequences. 

You are probably ready to move on and close the book on this chapter in your life. As painful as the high-asset divorce process might seem, rushing through it and agreeing to anything could cause you to lose what might rightfully be yours in the settlement. Consider the following ways making decisions in haste can affect your divorce. 

Understand the truth about bankruptcy

Those who are planning on filing for bankruptcy in California or any other state should understand its true impact on their credit. For instance, some believe that a lack of negative information on their credit report prior to filing for bankruptcy will reduce its negative impact. However, the fact that someone has filed for bankruptcy will be a significant negative mark regardless of what happened before he or she did so.

Although a person may have a lower credit score after bankruptcy, it is possible for him or her to start rebuilding his or her score in a short period of time. This can be done by getting a secured credit card or making timely payments on debts that remain after filing. Any information on a person's credit report will remain there for seven years. The only exception is a Chapter 7 bankruptcy, which remains on someone's credit report for 10 years.

How to determine custodial rights to a child

When parents in California, they may be assigned custodial rights to their children. These rights are determined based on a variety of information made available to a court in a case. Testimony from mediators or evidence introduced by an attorney are examples of what a judge could consider when making a decision. In many cases, one parent is given primary custody of a son or daughter.

The parent who is given primary custody is the one who the child will live with most of the time. The noncustodial parent will be given the right to visit with the child, and such rights may range from overnight stays to vacations and holidays. It is also worth mentioning that a parent may be denied the right to see a child if doing so would put that child in danger. Joint custody is also a possibility.

How to divide retirement accounts in a divorce

When a California couple gets a divorce, they may have to divide assets such as retirement accounts. While taking distributions from a retirement account before reaching a certain age usually results in taxes and penalties, a divorce is considered an exception. However, it is still necessary to complete the proper paperwork.

Taxes and penalties on a 401(k) or pension plan can be avoided with a document called a qualified domestic relations order. This must be prepared by a professional, and the plan's administrator must review and approve it. Furthermore, the couple should look over the document to make sure it reflects their wishes and includes information on whether the distribution will be rolled into an IRA or directly distributed. In an IRA rollover, the recipient does not have to pay either taxes or penalties. With a direct distribution, the spouse will need to pay regular income tax but no penalty.

No discharge rule of student loans debts in bankruptcy

For those in California having difficulty repaying student loans, the new Federal Reserve Chairman is wondering why these loans are not dischargeable in a bankruptcy. However, this is a question only Congress can answer.

Many people are under the mistaken impression that federally guaranteed student loans can be forgiven in bankruptcy. This is not the case. Many years ago, Congress essentially eliminated student loan debt from discharge in a Chapter 7 liquidation case. Later, it added the no discharge rule to Chapter 13 repayment plans.

Who pays for private school expenses after divorce?

As a parent, you want your children to succeed in all areas of life. One way you may be helping your kids achieve that goal is by enrolling them in private school, where they can benefit from a quality education in a safer environment with smaller class sizes, more learning opportunities in various subjects and high involvement from teachers and parents.

This educational route often comes with a high price tag. This may not have been an issue when your children first entered school, but what about after a divorce? Which parent is responsible for tuition and other costs?

Securing post-divorce finances for older adults

California residents at or over the age of 50 who decide to get a divorce are part of a growing group of people who choose to do so as they approach retirement. The Pew Research Center reports that the divorce rate for people in this age group is two times was it was 25 years ago and that it is growing.

No matter the age, a divorce can have a significantly negative impact on their finances. For people who are older, it can have a particularly catastrophic financial effect. However, there are some steps they can take to make sure that they have a stable financial future.

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