September 20, 2018|
Divorce can be difficult for anyone. When you’re a celebrity and are worth millions of dollars, navigating a split can be even more complicated. Seven months after initially filing for divorce, actress Julie Bowen and her husband seem to have agreed on how their assets will be divided. According to reports, the couple will split the 25.3 million dollar estate right down the middle. Bowen will receive $13 million and the family’s $3.1 million Los Angeles Home. Her husband will receive $12.3 million and the family’s primary home, valued at $5.4 million.
Using a Prenup to Avoid Property Division Requirements
It’s not uncommon for high net worth couples to execute a prenuptial agreement before getting married. Why? A prenup can allow the couple to sidestep divorce laws in the state of California. Specifically, couples can avoid property division requirements.
In California, each spouse in a divorce is entitled to one-half of all community property. It can be difficult to (a) identify and value the assets and (b) figure out who gets what. With a prenuptial agreement, the spouses can hash out property division details ahead of time and not necessarily worry about making an even 50/50 split.
It’s important to note that a court still has to sign off on how property is divided, even if there is a valid prenup. The judge will search for any indicators that the contract was signed under duress or if it unfairly benefits one spouse over another. In most cases, unless there is clear evidence of misconduct, terms of a prenup will be upheld.
How Couples Can Divide Property
Bowen and her husband privately negotiated the terms of their divorce. At the end of negotiations, each has agreed to essentially split the marital estate right down the middle. Once they agreed to share the assets equally, they also had to figure out how to divvy up each individual asset. In order to make sure that each spouse gets half of all property, they must:
- Identify all assets, including income, retirement benefits, royalties, real estate, stocks, vehicles, and anything else of value.
- Place a value on each asset.
Once assets are identified and valued, there are a few ways to begin the division and allocation process.
Liquidate and Split Profits: Couples can choose to sell their assets and divide the profits equally. This may prove to be challenging for certain assets that can’t be sold easily.
Allocate Items of Similar Value: If spouses aren’t interested in selling off their assets, they can go through a more detailed process. If one spouse wants to retain sole ownership and rights to a retirement plan valued at $100,000, the other spouse is then entitled to property that is also valued at $100,000. Or, the other spouse could opt to choose multiple items that, when valued together, equal $100,000. This process continues until each spouse has assumed ownership of an equal share of their marital property.
Assume Debts in Lieu of Assets: Spouses don’t only have to worry about their assets. Each is also liable for one-half of any debts they have. A spouse could agree to take on a significant share of the couples’ debt in exchange for a larger percentage of the marital property. For example, one spouse may really want the family home. If the home is encumbered by a mortgage loan, the spouse could offer to assume the debt. If the other spouse agreed, they would have to give up less in exchange for the home.
Since most property division negotiations are done privately, or with the assistance of a mediator, spouses retain a lot of control over the process. It’s important to identify what assets you want to retain and which you’re willing to give up. You can always consider assuming more than your share of the marital debt if you want to retain most of the property.
It’s always best to consult with an attorney when you are thinking about getting a divorce. You’ll have to figure out things like child custody, child support, alimony, and how to divide your assets. Contact our Los Angeles family law attorneys to find out how we can help you navigate your divorce.