Complex Asset Division During A California Divorce
California is a community property state, which essentially means any property either you or your spouse acquires while you are married belongs equally to both of you. Therefore, if you decide to divorce, this community property must be divided equally between the two of you.
At the Law Offices of Lynda Sheridan, our attorney and staff are experienced in navigating the intricate process of identifying, valuing and splitting high-value assets to ensure our clients receive their fair share.
Understanding Ownership In A Community Property State
The process of dividing marital property in California may appear simple at first glance. However, it is actually often very complex, especially if you and your spouse own significant assets that must be valued and divided, including:
- Retirement accounts, such as pensions and 401(k)s
- Stocks and stock options
- Investment portfolios
- Bank accounts and liquid cash
- Real estate, including primary residences and vacation homes
- High-value personal property, such as art, jewelry and furniture
- Luxury vehicles and collectibles
- Closely held businesses and professional practices
The laws regarding equal ownership can be a significant shock to those who are realizing for the first time that they may have to part ways with half of their hard-earned assets. Our founding attorney, Lynda Sheridan, will provide the elite level of financial scrutiny necessary to protect your interests during this transition.
Assets Not Subject To Division In A California Divorce
Further complicating the divorce and division process is that not all property is subject to division. In fact, any property you owned prior to marriage, or obtained through gift or inheritance, may be considered separate property – meaning you do not have to divide it with your soon-to-be ex-spouse.
Given this distinction, the crucial first step with any property division is to identify which property is community and which is separate, and then you must place a value upon community property and decide how you want it split between you and your spouse.
Even though a couple is free to attempt to resolve these issues between themselves – a process typically made easier with the help of their attorneys – they are often unable to do so if the divorce is contentious, in which case the court will be asked to do it for them. In any event, it is always a good idea to have a lawyer in your corner who has experience with the division of valuable assets.
How Are Businesses Divided During Divorce?
Property division can become increasingly complex if either you or your spouse owns a business or a closely held corporation. Here is a brief overview of how the process works in California:
- Determining separate vs. community property: Even if you owned the business before your marriage, it is not automatically exempt from division. Any increase in the business’s value that occurred during the years you were married may be considered community property.
- Valuing the growth: California courts look at why the business grew. If the value increased because of your unique skills and hard work, more of that growth is usually shared with your spouse. If the growth was mostly due to the economy or the nature of the industry, more of it may remain your separate property.
- Avoiding a forced sale: Many business owners worry they will be forced to sell the company or work with their ex-spouse as a co-owner. Fortunately, California law does not require you to physically split the business. Instead, the court focuses on splitting the net value of all shared assets equally.
- Using offsets and buyouts: If you wish to keep your business, you can often “buy out” your spouse’s interest. This is frequently done by trading other community assets – such as your share of a family home or retirement accounts – to offset the value of the business.
Identifying and parsing out community property versus separate property is rarely an easy task. If you own a business that is at least partly community property, reach out to us today to know your next steps.
Contact Our Family Law Firm Today For Experienced Guidance
No matter your specific situation, we can explain your legal options regarding how a business is valued and divided, as well as the potential tax consequences of your decisions. If you have questions about complex asset division, our founding attorney, our associates and our professional staff at the are here to help.
From our boutique office in Beverly Hills, we serve family law clients throughout Los Angeles County and Orange County. We invite you to reach out to us online or call us at 310-272-5357 to schedule a free 30-minute telephone consultation.