The process of a divorce is an emotionally distressing time and the legal proceedings can become complex and contentious, especially when it’s time to divide marital assets. But for spouses with a great deal of property and assets with a high monetary value, the process becomes even more challenging, often with significant issues to address. Though the 50/50 division of property laws in states like California may sound straightforward, it often becomes difficult to assess the future value of some types of assets before dividing them. This and other issues make high-net-worth divorces challenging to navigate.
Understanding Separate Assets and Marital Assets
In states like California with community property laws, a married couple becomes a “community” in the eyes of the law. Any assets or real properties acquired during the years of marriage are jointly owned properties subject to division even when the property or accounts are in only one spouse’s name. Exceptions to community property in a marriage include the following:
- Property owned by a spouse prior to marriage and not improved on or invested in significantly by the other spouse during the marriage
- Any gifts that were given to one spouse only
- An inheritance acquired in one spouse’s name
Any other assets and debts belong to both spouses and are subject to 50/50 division during a divorce in a community property state. In some cases, even assets considered separate because they were owned by one spouse prior to the marriage may be considered marital property if significantly increased in value over the duration of the marriage. If you have questions about divorce, speak with an experienced divorce lawyer in Los Angeles.
Common Assets Subject to Division
For some divorcing couples, the division of their marital assets addresses things like their marital home, cars, and household items such as furniture and appliances. For couples with a high net worth and many assets of significant value, items subject to division include those and more, such as:
- Bank accounts, stocks, and investments
- Real estate/rental properties/vacation homes
- Retirement packages and benefits
- Cars, boats, and private planes
- Intellectual property (works of creativity such as inventions and manuscripts)
Determining Value in a High Net Worth Divorce
High net-worth divorces almost always require the help of financial experts to investigate all aspects of each asset to determine its origin and whether it’s joint or separate property. Often issues arise during the division process when couples negotiate through their attorneys and financial experts to determine which assets are of equal value. For example, spouses have several options for dividing some types of assets. They may negotiate in order to do the following:
- Sell an asset and divide the profit 50/50
- Trade an asset one spouse wishes to keep with another of equal value
- Pay one another directly for the property they wish to keep
Most high-net-worth divorces result in a complex mixture of all of the above ways to divide property until each spouse walks away with as close to 50% as possible. Contentious issues often arise when both spouses want to keep the same property or asset because of sentimental attachment.
Another common issue occurs when divorcing spouses cannot liquidate certain assets for a 50/50 division. High net worth divorces often require special evaluations by independent financial experts as well as by those representing each party in the divorce.
Addressing Spousal Support in High Net Worth Divorces
Spousal support is another commonly contentious issue in high-net-worth divorces. If one spouse gave up opportunities to pursue a career in order to care for the home and raise children or one spouse was financially dependent on the other, they may request spousal support. The issue of the amount of support and who should provide it to whom is a matter the court ultimately decides if both parties cannot come to a mutually agreeable decision.