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Property Division in High-Asset Divorces

How Are High-Asset Divorces Different?

All divorces are hard. It's an emotional, fraught process that can be very complicated. A divorce is generally considered high-asset when one or both parties have a high net worth or hold large assets, such as businesses, investments, and multiple homes or properties. Because high-asset divorces tend to have complex financial situations, they must be treated a bit differently than a standard divorce.

When a couple's financial holdings are more complicated, determining how property is divided can be difficult. Additionally, it is not uncommon for couples in this situation to also have prenuptial or postnuptial agreements that must also be dealt with. If you are going through a high-asset divorce, it's important that you work with an experienced lawyer to ensure that your rights are protected and your case is handled appropriately.

Community vs. Separate Property

The first step in determining how property will be divided in a divorce is identifying marital property and separate property. California is a community property state. When two people get married or form a domestic partnership, they are considered one "community." Property that is acquired or money that is earned during the marriage is considered community property. The same can be said for debt accumulated during the marriage. Gifts and inheritances are not considered community property.

Types of property often found in high-asset divorces include:

  • Bank accounts and cash
  • Residences and vacation homes
  • Investment properties
  • Vehicles, including cars and boats
  • Businesses
  • 401Ks and IRAs
  • Pension plans
  • Stocks and investment accounts
  • Life insurance
  • Intellectual property
  • Patents

Separate property is property or money that was acquired prior to the marriage or domestic partnership. Additionally, money that is earned from separate property remains separate property. For example, if you owned an apartment building before your marriage, the earnings you make on that property during the marriage will remain individual property. Similarly, any additional property purchased with separate assets will also not be classified as marital property.

It is also important to remember that any property acquired after your separation is also separate property. This includes any money you earn after the date of separation.

What is Quasi-Community Property?

Property that was acquired during the marriage while living outside of California, but which would be considered community property had it been purchased in-state, is classified as quasi-community property. In California, quasi-community property is treated the same as community property.

Why Is High-Asset Property Division So Difficult

In California, each member of the marriage or partnership owns one-half of all community property and is responsible for one-half of any community debt. Consequently, during a divorce, community property must be divided fairly and equitably. This doesn't necessarily mean that everything must be split in an exact 50/50 ratio. Instead, the divorcing couple and the courts will work to establish a property division settlement that is fair and balanced.

The more assets you have, the more complicated property division can be. High-asset divorce cases often involve many different property types, including non-traditional holdings, such as art, intellectual property, and various investment accounts. Consequently, figuring out how to divide property in a manner that is fair and equitable is challenging.

Dealing with Hidden Assets

Sometimes, one party is tempted to hide assets that they do not want to be divided during a divorce. This is illegal, and you should never attempt to hide assets during a divorce. In California, you are required to disclose all your assets truthfully and to the best of your ability. Failure to do so can result in the innocent spouse being awarded a larger portion of the assets in question and/or a charge of perjury.

If you believe that your former spouse is hiding or withholding assets, you should speak with your attorney right away. This is a serious offense and must be dealt with accordingly.

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