How financial investments are divided in a divorce depends upon the state in which a couple divorces. In California, financial investments are divided according to California’s laws governing community property. Any assets acquired during the course of a marriage in California are considered community or marital property and are divided equally upon divorce.

Financial investments may be excluded from statutory division in a divorce if another arrangement is specified in a valid prenuptial or postnuptial agreement or if those investments are one spouse’s separate property.

When are Financial Investments Considered Separate Property?

Financial investments are considered separate property when named in a prenuptial or postnuptial agreement or:

  • Were owned by one spouse prior to marriage
  • Were gifted or inherited by one spouse prior to or during the marriage
  • Were bought with the proceeds, rents, or monies from one spouse’s separate property.

Any increase in the value of separate property that results from a shift in the market is also separate property. However, if an increase in the value of separate property is due to the other spouse’s efforts, that appreciation is subject to division as community property.

Vested and Unvested Stock Rights

Stock can be both community and separate property, depending on the date it vests. Any portion of an unvested stock that a spouse held before marriage, along with any portion of the stock that was vested at the time of marriage, is separate property. However, unvested or vested stock earned during the marriage is considered marital property.

Dividing investments can become complicated quickly. Therefore, it is advisable to have an experienced divorce attorney on-hand to assist you when apportioning these assets.

What is the Date of Separation?

Investments made after the date of separation would be separate property if separate property funded the investment. Sometimes the date of separation is the date one spouse chooses to leave the marital home. However, it is defined by a spouse’s actions to end the marriage.

These actions may be physical, financial, or behavioral separation. The court will decide on a date of separation if the spouses cannot.

Practically Dividing Financial Investments

Not all means of dividing financial investments are practical. There are certain investments that suffer tax implications if split. Retirement accounts and pensions typically require the pension administrator to draft a Qualified Domestic Relations Order or QDRO before distributing funds between spouses.

Spouses may choose to divide their marital estate equally, with one spouse taking financial assets and the other taking real property and other items of value. Regardless of what route you decide to take, have any agreement reviewed by a legal professional for potential pitfalls and tax consequences.

Contact an Experienced Attorney

All marital assets, including financial investments, must be identified and valued before any divorce settlement or trial. This is especially true in California as it is a community property state. Complex and high-end asset divorces require experienced, knowledgeable divorce attorneys like those at Fernandez & Karney to ensure your legal property rights are protected.

Fernandez & Karney can also handle your other divorce matters involving child custody and visitation, child support, and spousal support. Contact our offices today and schedule your confidential consultation with a professional.