Examples of Complex Assets in California Divorces
Many spouses may have complex assets in their marital estates without fully realizing it. The complexity of these assets might be nothing more than a tax inconvenience during the marriage, but what happens when spouses decide to get divorced? Suddenly, these complex assets take center stage as spouses try to figure out how to divide them. The first step of complex asset division in California is the identification of these assets. Let’s consider a few examples of complex assets:
Stocks and Bonds
Stocks and bonds can be difficult to value because of the way community property works in California. Normally, assets acquired prior to the date of the marriage are considered “separate property.” In other words, they are ineligible for property division in the event of a divorce. However, the increase in value of these assets may be considered marital property if the increase occurred during the marriage.
This situation becomes even more complex when dealing with pre-IPO shares. These are often issued by employers to employees, and there is no real way of knowing their true value until they hit the market. Divorcing spouses do not have time to wait around for the IPO, so they may need to assign a value based on best estimates.
Retirement Assets
Like stocks and bonds, the increase in value of retirement assets can be considered marital property in certain situations. In addition, any contributions to a retirement plan during the marriage may also be considered part of the marital estate. The situation becomes even more complex if a spouse invests their retirement assets, as the various dips and rises must all be taken into account.
Businesses
Family businesses are definitely complex assets. Even if a spouse establishes a business before getting married, part of it may be considered marital property if the other spouse contributes to its success in some way. Some courts have ruled that simply staying at home and taking care of the children is equivalent to a monetary contribution to the business since it frees up time for the other spouse to run the business more efficiently. You also need to consider the type of business, as its structure (S-Corp, C-Corp, LLC, sole proprietorship, partnership, etc.) will affect its division during a divorce.
Real Estate
Like businesses, contributions to real estate can be difficult to quantify. Even if a spouse owns real estate prior to the marriage, it may still be eligible for property division if the spouse contributes to its increase in value. The obvious example would be adding value via “sweat equity,” perhaps via a DIY renovation.
Trusts
Trusts are an interesting case because they may represent both inheritance (which is considered separate property) and deferred income. For example, a relative might leave a spouse millions of dollars, but those funds might be locked up in a trust. This trust might distribute a small portion of the funds each month, ensuring that the spouse doesn’t spend irresponsibly.
It’s important to note that even if a spouse is listed as a beneficiary for the whole amount of the trust, the entire sum cannot be “counted” in the context of the divorce until they actually receive it. Inheritance funds may also become commingled with other marital assets, such as real estate.
Contact a California Asset Protection Attorney Who Has Experience with Complex Asset Division
If you have been searching for a asset protection lawyer in California who has experience with complex asset division, look no further than the RM Law Group, LLP. Over the years, we have helped numerous spouses identify and divide even the most complex assets during their divorces. We know that these kinds of situations can often seem impossible to overcome, but you are not alone in this process. With our guidance, you can walk away from your marriage with a sense of financial security.
Jason Martinez is a co-founding partner of RM Law Group, LLP. His practice focuses exclusively on California Family Law and community property division, including litigation and settlement of complex and high-conflict divorce and child custody proceedings. Jason understands that divorce and family law issues have long-term effects on all family members, especially the children.
