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Divorce has financial aftershocks

Divorce poses many problems that require consideration of finances and California's family law. This is particularly true for older couples, especially those over 50-years old whose rate of divorce has doubled since the 1990s.

One reality of marriage is, despite the long-standing advice of experts, that one spouse controls family finances. This can create difficulties for the other spouse during the end of a marriage. Spouses should begin to gather information on finances when divorce is imminent.

Major expenses and assets should be considered first. Health insurance is one of these issues. Spouses who are insured under their soon-to-be-ex spouse's plan may continue coverage under COBRA for 36 months. However, this may be expensive because an employer does not pay a share of this expense. Medicare does not take effect until a person turns 65.

Spouses should also consider their home ownership and whether either spouse intends to keep this asset. Keeping a home has disadvantages. Mortgage payments, maintenance and repair costs may be expensive and exceed the spouse's income and other financial resources.

However, the cost of purchasing or renting another residence should be calculated. Alimony and child support responsibilities may play a role in mortgage approval and the applicant's credit rating considered during the mortgage application.

Many couples decided to continue joint ownership of their home until the children are out of school and because of rising housing prices. If this occurs, spouses should enter a clear agreement governing home improvements, insurance and taxes.

It is never too early to consider retirement finances. Stay-at-home spouses may not be eligible for Social Security benefits if they were in the workforce for less than 10 years. However, the spouse may be able to qualify for half of the spouse's benefits if the marriage lasted at least 10 years. The ex-spouse's benefits are not reduced, and the ex-spouse is not notified if a spouse applies for these benefits.

A qualified domestic relations order must be filed if a spouse intends to obtain part of their spouse's contributions to a retirement plan such as 401(k). The recipient of these benefits can transfer them into an IRA or withdraw the money early without penalty.

An attorney can help with this planning and seeking a fair divorce decree. An experienced lawyer can also provide guidance on other family law issues such as property division.

Source: CBS News, "Divorce tips for financial security," By Jillian Harding, Nov. 13, 2017

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