When a couple decides to divorce, they must divide their marital assets, which can be a lengthy process. While the process of distributing marital property is relatively straightforward in many instances, it can be complicated and contentious in high-asset cases.
If you are contemplating ending your marriage and you and your spouse own significant or valuable property, it is advisable to meet with a trusted attorney regarding to discuss how your assets may be divided.
If you have questions about the division of marital assets in a divorce, the knowledgeable San Diego divorce attorneys of Doppelt and Forney APLC can inform you of your rights and what measures you can take to protect your interests.
Community Property vs. Separate Property
California differs from other states in that it is a community property state. In other words, any property obtained by either spouse during the course of their marriage is presumed to be the property of both spouses unless it qualifies as separate property by law or was deemed separate property by a pre-nuptial or post-nuptial agreement.
Any property owned by either spouse before the couple was married is the separate property of that spouse. Property obtained via a devise, gift, descent, or bequest is considered separate property as well. Finally, profits and income derived from separate property and income earned after the date a couple separates qualifies as separate property.
Property Division in California Divorce Cases
Under California law, community property is generally divided equally in divorce cases. Separate property, on the other hand, remains separate. Issues can arise when an asset includes both separate and community property.
It can be challenging to determine not only who holds interest in property that is a mix of community and separate property and to what degree, but also to determine the value of the property. For example, if one spouse receives restricted stock options during the marriage that will not vest until after the divorce is final, the parties may dispute the nature and value of the options.
Likewise, if a party has stock or ownership interests in a business, it is essential that the value of the interest or stock is assessed accurately. There are multiple ways to determine the value of business interest, and parties may disagree as to which method is appropriate.
What Constitutes a High Asset Divorce?
Generally, a divorce can considered to be high asset if it involves at least $1 million in net liquid assets. Liquid assets would include cash and anything that could be readily converted into cash, such as stocks, bonds, shares of a business, and mutual funds.
Real estate, cryptocurrency, and valuable collectibles, antiques, and art may also be taken into consideration when determining if a divorce should be deemed high asset. While the same laws and rules of procedure apply to high asset divorces and dissolution cases involving property that has a lesser value, high asset divorces tend to be more involved and combative and may take longer to resolve.
Evidence in High Net Worth Divorce Cases
In high asset divorce cases, parties may disagree over whether a property is community or separate, the value of a property, and whether any marital agreements should apply. A party that disputes the nature of an asset bears the burden of proving its character. For example, if one spouse argues that a home is a separate rather than a community asset, they must offer evidence in support of their assertion. This evidence will include a pre-nuptial agreement.
In California, the courts will generally only enforce pre-nuptial agreements that comply with the Uniform Premarital Agreement Act (UPAA) and do not contain any illegal terms. The UPAA dictates that pre-nuptial agreements must be in writing and must be signed by a notary and each party.
Both parties must sign the agreement voluntarily as well, without coercion or intimidation, and they must have at least a week to hire an independent attorney to review the agreement prior to signing. Judges may also set aside pre-nuptial agreements that they find to be unfair or that will leave a spouse without sufficient financial means.
The law regarding not being able to enforce a prenuptial is contained in Family Law Code Section 1615 and there are many factors. Of course, this is up to the discretion of the Judge.
Evidence also comes into play in cases in which a couple commingled separate and marital property. For example, if either party used income from separate property to maintain or purchase a community asset or to a separate account that earns interest or a 401K with community funds, they may disagree as to whether the property should be deemed separate, community, or a combination of both.
As such, it may be necessary for both parties to retain forensic accountants to determine which portion of the account is subject to division, to provide an accurate assessment of the value of the property, and to offer testimony in support of their assertions.
Similarly, in some high asset divorces, one spouse may attempt to diminish the value of separate property or assets in order to minimize spousal support obligations. In extreme cases, parties may go so far as to attempt to hide assets. Signs that a party may be hiding assets include a sudden increase in business expenses, transferring of property to friends or family, hiring financial advisors, and newly opened offshore accounts.
Thus, parties in a high asset divorce will likely have to engage in extensive discovery to make sure that they have identified all community and separate assets.
Speak With a Proficient San Diego Divorce Attorney
The process of dividing assets that you have accrued over the length of a marriage can be legally and emotionally complex, especially if they are substantial. If you or your spouse intend to seek a divorce, it is important to speak with a proficient attorney to discuss how the divorce may affect you financially.
The skilled San Diego divorce attorneys of Doppelt and Forney APLC will assess the facts of your case and advise you of your options for seeking the most favorable outcome possible under the circumstances. You can reach us through our online form or call us at 800-769-4748 to set up a free and confidential meeting.