Asset Division Attorneys In Santa Monica, CA
Dividing assets in a divorce is complicated, especially for couples with high-value estates. Divorce is an emotional time for most couples, and not knowing the full extent of California’s laws outlining divorce can make the process impossible to go through alone. Having a Santa Monica asset division lawyer on your side can make a huge difference in your mental well-being and ability to legally protect your assets.
Kramer & Zitser, LLP, a Los Angeles-based family law firm led by two Senior attorneys, provides legal representation in high-asset divorce cases involving complex financial and legal matters.
Steps During Divorce Proceedings in California
In 2022, California had a divorce rate of 5.88 per 1,000 residents. Getting divorced in California takes at least six months to complete but usually takes longer if there are any disputes or complexities with tracing which assets belong to which spouse. The process involves four main steps.
The First Step
The first step is to open a case for your divorce. One spouse will file the initial paperwork to begin the process and officially notify the other spouse. The other spouse then has an opportunity to file a response if they choose to participate.
This is followed by separation. It’s important to clearly establish the exact separation date so any assets and debts acquired afterward are considered separate property. What either spouse earns, or debts incurred after this date typically count as separate property.
The Second Step
The second step involves both spouses sharing the full extent of their financial information with each other and all divorce attorneys involved. A detailed outline of your assets’ value is incredibly crucial to help ensure fairness during division.
In 2021, in California, the average age for a first divorce was 30.5 for men and 29 for women. Many individuals don’t understand the full extent of their finances, and an experienced attorney can provide you with the guidance you need to comply with state law. This helps to ensure transparency about assets, debts, income, and expenses.
The Third Step
The third step is to make decisions about important issues such as dividing property and debts, and determining any spousal support. Couples can agree on these matters themselves, or if they cannot agree, the court will make decisions for them.
This step generally takes the longest amount of time. Depending on the spouses’ emotions and compliance, this process can be drawn out and emotionally overwhelming. Having a prenuptial agreement already in place can make this step streamlined and simple for all parties involved.
The Fourth Step
The fourth and final step is to have both spouses submit final paperwork to the court. After the court reviews and approves everything, the divorce is finalized and legally complete.
Understanding California Community Property Law
California follows community property laws. This means that unless the couple has a legally valid prenup, most assets acquired during the duration of marriage belong equally to both spouses. Property includes anything that has value and can be bought or sold, such as a home, a car, bank accounts, retirement plans, and even debts.
While some couples can informally divide their assets after separating, California law still requires that a judge formally approve the division through a court order. This court order can either be in the form of a written agreement that both spouses sign or, if no agreement can be made, a judge will make the decision after a hearing.
Until the court order is issued and concluded, all property acquired during the marriage belongs to both spouses, regardless of who currently uses the property. The California Family Code classifies property into two main categories:
- Community property. These are any assets acquired by either spouse during the duration of the marriage. This means any income, purchases made with marital funds, debts, and retirement benefits are accumulated.
- Separate property. These are any assets that either spouse owned before marriage, acquired after separation, or received as a gift or inheritance, even if those gifts or inheritances came during the marriage. Separate property remains with the individual spouse as long as it has been kept separate and not mixed with community property.
Commingling and Further Assets Division Complications
When an asset is partially community property and partially separate property, this is referred to as ‘commingling.’ For example, if a spouse had an investment account before getting married, but after marriage, joint marital funds were deposited into the account, that account is now partly separate and partly community. Debts are treated similarly to property.
Debts incurred during the marriage, such as mortgages or loans, are community debts, and both spouses are equally responsible regardless of whose name is on the debt. Separate debts, such as credit card charges after separation or debts from before the marriage, belong solely to the individual spouse. Because commingling is so common during marriage, having careful financial documentation is vital.
Dividing Property
When dividing property in divorce, California courts generally order that each spouse keep their separate property and debts, while community property and debts are divided equally. Unless a legally valid prenuptial agreement is established and followed, courts will typically follow the equal division law.
In high-value divorces, the accurate financial valuation of each asset is essential to ensure compliance and fair property division under California law.
Here at Kramer & Zitser, LLP, we have years of experience helping clients navigate high-value assets during their divorce. We approach each case with empathy and help clearly outline expectations during proceedings.
Real Estate
Real estate remains a top asset during divorces. Those with multiple properties, vacation homes, or investment properties often require professional appraisals to determine current and future value if the property generates income.
For properties in Santa Monica, where the average home value in 2023 was 1.81 million, this can be extremely stressful for those going through a divorce. This requires an experienced attorney to help contact professional appraisers and handle proceedings.
Investment Portfolios
Investment portfolios represent another significant asset category. This can include stocks, bonds, and mutual funds. Valuing investment portfolios involves knowing current market values and determining when the portfolios were acquired and by which spouse, as California law is strict about timing.
Investment portfolios can extend beyond stocks to include private equity stakes, hedge fund interests, and venture capital investments. These require an entire team of professionals with extensive experience handling high-value assets.
Retirement Accounts
Retirement accounts, such as pensions, 401(k)s, and IRAs, require careful analysis since they often represent substantial future income streams. California courts divide retirement benefits according to the portion earned during the marriage.
To execute this, a Qualified Domestic Relations Order (QDRO) is necessary and outlines how the accounts will be split post-divorce without tax penalties or early withdrawal fees. The non-owner spouses are given a proportional share of the plan’s original investment cost.
Business Interests
Business interests can be among the most complicated assets to value and divide in a divorce. Many professionals, such as doctors, lawyers, and entrepreneurs, may own a solo practice, partnership stake, or shares in a corporation.
Being able to appraise these factors properly requires a professional with experience handling these types of high-value cases. To determine the community portion versus a separate portion of the business, each spouse must submit separate valuations. Some businesses must also be valued for any future income potential.
Unless under specific situations or both spouses agree otherwise, the business will be divided equally under community property law. This can mean awarding one spouse the business while providing the other spouse with similar-value community property.
Intellectual Property
Intellectual property (IP) rights and royalties can be some of the most valuable and complex assets. Individuals such as athletes or celebrities often have income from music streaming, film rights, book deals, copyrights, trademarks, patents, likeness rights, and endorsement contracts.
For anyone with IP, protecting it during divorce is important. A prenuptial agreement can help make sure it stays separate. In some cases, one spouse can buy out the other’s share. To do that fairly, the IP needs to be professionally valued. Usually, this is done by estimating future income, calculating how much it costs to create, or comparing it to a similar IP that’s been sold.
California community property law still applies to IP and royalties, depending on when the IP was created. If it was improved or supported by the other spouse during the marriage, it might become community property. Because IP can’t be split in half equally, California courts often require the couple to share the income they earn. For example, royalties from a book or music.
Other High-Value Assets During Divorce Proceedings
For those disclosing their assets during a divorce, it’s vital to think over the full extent of your finances. Other assets might include:
- Cryptocurrency holdings
- Luxury vehicles
- Yachts
- Private aircraft
- Fine art collections
- Rare jewelry
- Designer fashion
- Rare memorabilia
- Vintage wine collections
Engage Our Experienced Team
Failing to fully identify or properly value these assets can affect the fairness of the division. If you are involved in a high-asset divorce in Santa Monica, it is important to take immediate steps to protect your financial interests. Kramer & Zitser, LLP, can help you evaluate your assets, secure the right documentation, and pursue a fair division under California law. Contact us today to speak with our legal team about your unique case.
