San Mateo California Family Law Blog

Saving for retirement is a lifelong endeavor. Most people in California start out saving early in their careers with the goal of achieving a financially secure retirement. Unfortunately, no matter how well-considered a plan for retirement might be, it can be knocked off track by major life events, such as divorce. To avoid losing important milestones in the process of saving for retirement, it is essential to understand the various available options during property division.

Dividing up a retirement account can be a tedious task, and making early withdrawals usually requires a qualified domestic relations order -- QDRO -- in order to avoid penalties and taxes. In a marriage in which both spouses worked and had separate retirement savings, splitting up the funds in the separate accounts might not be necessary. If the amount in both retirement accounts is roughly similar, the couple may agree to divide their property along their individual accounts. This approach circumvents the need for a QDRO and can be simpler overall.

In certain situations, more money really does equal more problems. In the case of a high asset divorce, a California couple might have to divide money from multiple income streams, complicated investments, businesses and other complex financial assets. However, couples do not have to go into marriage blindly trusting that they will figure out money matters if they end up divorcing. Here are a few ways in which a person can protect his or her finances and interests during divorce.

Signing a prenup before marrying is a fairly obvious first step, but an important one that should not be overlooked. A couple can agree to what a division of marital assets would look like in the event of a divorce, and can also clearly define which property is marital and which is separate. These agreements can also address potential spousal support, particularly if one spouse plans to sacrifice his or her career, associated benefits and peak earning years in order to raise the couple's children.

California parents typically understand how important it is to respect their children's best interests during divorce. However, these same parents often end up overlooking their own financial interests in the process. Things like child custody can significantly impact future taxes. While taxes should not be a driving force for any given custody arrangement, parents should still understand how their taxes might look.

The Tax Cuts and Jobs Act of 2017 eliminated the dependency exemption, which might lead some parents to mistakenly believe that it does not matter who ends up claiming their children. However, when claiming a dependent, a parent can also access other important benefits, such as a child tax credit as well as earned income credit. Knowing this, parents may be more eager to claim their child, but divorced parents cannot both claim their child in the same year.

Having the financial security of a well-paying job can be extremely reassuring during difficult periods of life. Unfortunately, jobs are not always as permanent as they may seem. Losing a job during a high asset divorce is not an easy situation for California residents to find themselves in, but here are a few ways to minimize any negative consequences.

Searching for new employment as soon as possible is important for more than one reason. Not only does securing a new job translate to less financial disruption, but actively searching for work also sets a positive tone for divorce proceedings. As such, it is important to make records of all activities related to a job search. This includes keeping track of things like time spent searching employment websites, submitted applications and resumes, interviews and more. It may be necessary to provide this type of documentation to the court.