It can be difficult to keep a handle on your finances during a divorce. A divorce can last anywhere from 90 days to well over a year and, during this time, your finances are not always necessarily your own to work with.
As a community property state, California mandates all marital property, also called community property, be divided equally in a divorce. So, during divorce proceedings, you cannot do whatever you want with your money because it is still community or shared money. This includes making investments, no matter how sound. Temporary restraining orders issued during divorce proceedings can limit and restrict what either party can do with community assets and debts. These “restrain” either party to the divorce from using community funds in a way that would interfere with the property division in the divorce.
For example, it can prevent either party from liquidating certain assets, signing new financial contracts, selling assets, obtaining assets, taking out new debts with community finances, lending community money, borrowing on behalf of the community, making investments without the cooperation of the other party or otherwise using community assets without the other party agreeing. This kind of order does not mean you cannot touch your accounts during the whole divorce.
You cannot be restrained from paying regular household or business bills or providing for your children. You are also still able to use separate funds as you see fit. You can also use community funds for certain purposes if you gain the agreement of your spouse and have a judge approve it.
However, it is unlikely you will be permitted to make any form of investment that would tie up significant community assets. In general, it is best to wait to invest after the divorce is finalized unless you feel you have a particularly compelling opportunity to do so. In any case, always make sure your spouse agrees to your investment actions before you make any commitments. Remember, if you stand to make a profit off of your investment relatively soon, you could end up parting with half of that in the divorce.
Are you in the Los Angeles area and have questions about investments and divorce? Fernandez & Karney has experience representing high net-worth individuals and handling complex divorces involving significant investments in Los Angeles County. Serving Los Angeles and surrounding areas, California family law attorney Mark H. Karney offers efficient and tenacious legal counsel. Call our office at 310-622-9434; email us at firstname.lastname@example.org or contact us through our online form today to schedule a free consultation.