For many high-net-worth couples, financial lives become deeply intertwined over the course of a marriage. Personal investments, real estate, retirement accounts, and business interests often merge over time, making it difficult to determine which assets belong to each spouse. When this happens, California law requires a process known as tracing to identify the source and character of each asset.
At Fernandez Law Group, our Los Angeles family law attorneys understand how critical accurate tracing is in high-value divorce cases. Whether you are seeking to protect your separate property or claim your fair share of community assets, proper financial analysis and legal advocacy can significantly impact the outcome.
What Does Tracing Mean in a California Divorce?
Tracing is the process of proving the origin of funds or assets to establish whether they are community property, separate property, or a combination of both. This is especially important in California, where community property laws presume that any asset acquired during the marriage belongs equally to both spouses.
To overcome this presumption, the spouse claiming an asset as separate property must provide clear evidence that the funds used to acquire or maintain it came from a separate source, such as inheritance, pre-marital savings, or personal gifts.
How Commingling Happens
Commingling occurs when separate and community funds are mixed in a way that makes their origins difficult to distinguish.
This can happen in several ways, including:
- Depositing both spouses’ earnings into the same bank or investment accounts.
- Using community funds to improve or maintain separately owned property.
- Paying down business or real estate loans with a combination of marital and separate income.
Even when commingling is unintentional, it can complicate property division. Without adequate records, courts may treat the entire asset as community property, resulting in an uneven financial outcome for the spouse who originally owned it.
Common Methods Used to Trace Assets
Courts and financial experts use two primary methods to trace commingled funds.
They include:
- Direct Tracing: Demonstrating that separate funds were used for a specific transaction or investment through clear documentation such as account statements, wire transfers, or checks.
- Family Expense Tracing: Showing that community funds were exhausted by family expenses, leaving separate funds as the source for specific assets or purchases.
Both methods require meticulous financial recordkeeping and often the assistance of forensic accountants. Our attorneys coordinate closely with these experts to build accurate, verifiable tracing analyses that protect our clients’ property interests.
Why Tracing Is Especially Important for High-Net-Worth Spouses
High-net-worth divorces typically involve a mix of real estate, investment portfolios, business interests, and retirement accounts—all of which may include both community and separate property components. Without tracing, the division of assets can become inaccurate or unfair.
Proper tracing can:
- Preserve ownership of pre-marital or inherited property.
- Prevent double-counting or overvaluation of community assets.
- Support fair negotiations and settlements based on factual evidence.
At Fernandez Law Group, our attorneys understand the complexities that arise when high-value assets are intertwined. We provide the legal insight and financial analysis needed to ensure the division of property is supported by evidence, not assumptions.
Speak with Our Los Angeles High-Net Worth Divorce Attorneys Today
If your California divorce involves commingled assets, detailed tracing can make the difference between a fair resolution and significant financial loss. The Los Angeles County family law attorneys at Fernandez Law Group work with financial experts to identify, classify, and protect your assets with precision.
Contact us today at 310-393-0236 or online to schedule a confidential consultation and learn how our experienced team can help you navigate the financial complexities of high-net-worth divorce in California.