California residents may see a reduced tax bill by divorcing their spouses. Furthermore, it may be possible for an individual to qualify for government health benefits by ending his or her marriage. This is because those individuals could have fewer assets and a lower yearly income on their own compared to when they were married. However, there is also a chance that a person loses out on the ability to benefit from IRA contributions or a 401(k) balance.
When a person is married and unemployed, a spouse may be able to contribute money into an IRA for that individual. This is only true if a married couple files their taxes jointly. If a working spouse has a 401(k), an unemployed spouse may automatically be named the beneficiary of that account. After a divorce, the owner of the account is typically free to choose another beneficiary.
If an individual owns a business, it may need to be divided in the divorce. Therefore, it is possible that the founder may be asked to cede some or all control of the business to a former spouse. That may result in a former spouse obtaining influence in a company and impacting its ability to be successful. It may also affect the personal relationship between former spouses.
During a divorce, marital property is generally split between the parties to the marriage. Therefore, an individual may lose money in an IRA or a bank account. People may be able to protect their assets by creating a prenuptial agreement. Such a document may clarify who gets to retain control of a business or the marital home. An attorney may help an individual obtain a favorable and timely settlement in a divorce case.