A divorce can have a profound impact on your finances. We outline key considerations for maintaining your financial health as you proceed through the process.

No matter whether your divorce is amicable or contentious, it can have a profound impact on your finances. There are myriad rules and regulations to consider. We outline some of the most significant and how they could impact your assets.

Who Gets What

No matter where you reside, generally any assets or property that you acquired while married will be divided when you divorce.

There are a few exceptions. For instance, if you inherited assets or received gifts individually, the division rule may not apply. Also, you may be able to keep the assets and property that you acquired before you got married.

However, your state law will set out how to divide your assets and property, and it will follow one of two routes:

1. Common law property states include those states where the judge has discretion to listen to individual circumstances before dividing assets and property. Those factors include: earning ability for each spouse; the duration of the marriage; and the amount that each spouse contributed to building the marriage’s assets. All but nine states follow this format.

2. Community property states, on the other hand, are those in which courts generally equally divide assets and property acquired during the marriage. The states that observe this law are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In addition, residents of Alaska can choose to opt in to a community property agreement.

What About Debt?

Debt survives a divorce, and states differ as to how they allocate which spouse is responsible for which debt.

1. Common law states (see above) assign debt acquired in individual accounts to the account holder, while debt in joint accounts is generally treated the same way as assets and property.

2. Community property states typically divide debt equally between spouses, no matter whether it was from an individual or joint account.

You should close all joint accounts post-divorce to avoid being responsible for debts that your spouse incurs. Once the divorce is finalized, have them reclassified as individual accounts by your creditors.

If you and your spouse have a mortgage for a home that has appreciated in value, consider selling it before the divorce is finalized, as the IRS allows you to take advantage of $500,000 in realized capital gains if you are a married taxpayer, an amount that is cut in half for single filers. We recommend consulting a tax advisor to navigate these rules.

Retirement Assets

If you or your spouse have money in a 401(k) or pension plan, it may also be divided during a divorce. You can seek a share of your spouse’s 401(k) or pension plan benefit if you obtain a Qualified Domestic Relations Order (QDRO) and present it to your spouse’s plan sponsor before distributions have been completed.

If your efforts are successful, you may decide to roll them over into an IRA to defer taxes. Discuss this option with a financial professional who is familiar with the divorce process.

Estate Planning

If you have already drafted a will, make sure that you review it (and if you don’t have one, work with an estate planning attorney to draw one up). The attorney will work within your state’s estate laws to distribute your assets properly.

Review your beneficiary designations for any pensions, 401(k)s, and insurance policies. Note that a spouse is required under federal law to be the sole beneficiary of pension and 401(k) benefits unless that spouse waives such rights.

With so much at stake financially as you proceed through a divorce, don’t do it alone; it’s best to work with an attorney or financial professional who specializes in the process to help protect your assets to the greatest extent possible.

The post Divorce Implications on Your Finances first appeared on Georgopoulos Wealth Management.

With so many credit cards available, it’s not surprising that careful thought is required to decide which one to select. Here are some factors to consider when choosing the card that suits you best.

Many millennials have a cautious attitude towards credit, perhaps due to large student loans. Nonetheless, the right credit card, responsibly managed, can provide you with beneficial perks. Even if you have no credit history, most people can qualify for some kind of credit card.

Your first card might be basic. If you have no credit history or a low credit score, your first card will probably offer few frills and a modest credit limit. The good news is that there are cards that match this description and charge no annual fee. You can use your first card to establish your creditworthiness by making timely payments.

Cash back, points, or miles? Many cards offer rewards when used to make purchases. Cash back cards offer cold hard cash, the most versatile reward. You’ll find cards that offer 3% to 5% back (or more) on selected purchases and at least 1% cash back on all other purchases. If you like to travel, you might consider cards that offer frequent flier miles on one or more airlines. The third type of reward, points, can be exchanged for cash or miles or can be used to purchase selected items directly.

Cards compete by offering introductory bonuses to new members. Some cards may offer to pay you a lump-sum bonus if you use your card for a set amount of purchases in the first few months after opening the account. You might also be offered an introductory period of 0% interest on purchases and balance transfers. The period might run from 6 to 18 months. After that, you’ll be assessed interest at a specified annual percentage rate (APR) on any remaining balance that you don’t fully pay by the due date for the current billing cycle.

Understand all the card’s features. Some cards offer high bonus rewards on purchases from selected types of merchants, and some of these cards rotate the merchant type each quarter. If you accept a card with rotating merchants, remember to activate your participation each quarter if you want to earn the high rewards. Some cards that charge an annual fee will waive it for the first year. Annual fees might range from $49 to $500 or more. Cards can offer all type of benefits, such as free car rental insurance and free baggage check-in. Read all the fine print before choosing which card to get.

Your credit card usage should fit into your savings and investment plans. It’s important to avoid chronic large credit card balances that compromise your ability to save for your retirement. But it’s also important to establish a positive credit history. Call or email me today to review your savings and investment plans. Together, we can refine your monthly budget to accommodate credit cards without shortchanging your important financial goals.

The post Is owning so many credit cards is beneficial for you? first appeared on Georgopoulos Wealth Management.