High-Asset Divorce Attorneys In Santa Monica, CA
Divorce is often an overwhelming time for any couple. Those with high-value assets often find themselves facing unique legal and financial challenges during divorce proceedings. If you’re facing your divorce alone, it’s vital to seek proper legal counsel through a Santa Monica high-asset divorce lawyer.
Kramer & Zitser, LLP, is a family law firm in Santa Monica that combines the experience of two Senior attorneys, advising clients throughout the entire divorce process, from beginning to end.
Divorce and Community Property Laws in California
Santa Monica is home to a variety of industries, with the top occupations being management, arts and media, and business and financial operations. The city’s average household income was $109,739 in 2023, making protecting your assets during divorce vital to your future.
With Santa Monica’s close proximity to Silicon Beach and the more than five hundred tech companies that operate there, it’s common for divorcing couples to navigate high-value assets. California follows community property law under California Family Code Section 770. Assets in marriage are generally considered to be divided into these two categories:
- Community property. This is any asset gained during the duration of the marriage, regardless of which person in the marriage acquired it.
- Separate property. This includes any asset acquired before the marriage, any inheritance received by one spouse, personal gifts, and any income generated from separate property. These assets generally remain with the spouse who owns them as long as they are kept separate and not commingled.
Being able to properly determine what is considered community property versus separate property requires extensive knowledge of California law and the full extent of the marriage estate. Our attorneys work to ensure that separate property is properly traced and credited.
What Assets Remain Protected in Divorce?
With 6.8-9.7% of Los Angeles County’s population being divorced, you aren’t alone. In high-asset divorce cases, complications are usually due to the volume of separate and community assets and any disputes that may arise. This can include real estate income, trust distributions, and investment gains.
Correctly classifying property as either community or separate can significantly impact the financial outcome. For example, if one spouse owned a rental property before getting married, it’s likely that the home will remain a separate asset. However, certain circumstances can turn the classification into community property. If joint marital funds were used to maintain or improve the property, it is then commingled.
What Is Commingling?
Commingling happens when your separate property becomes mixed with community property, making it more difficult and time-consuming to determine the true owner. During marriage, it’s extremely common for assets to become commingled. An example of commingling would be when one spouse puts funds from an inheritance they received before the marriage into a joint investment account.
Once those funds are mixed with community property, it becomes difficult to prove that they’re separate. This becomes complex and needs strong proof that the property remains separate by providing detailed financial records and strong legal backing. In a city where real estate and investments often rise in value, these laws can significantly impact your finances and well-being. Financial tracing can potentially separate commingled funds, but the process is detail-intensive.
Without proper documentation and evidence, assets may lose their separate property status and could be divided under California law. Determining community or separate property and assigning proper value to each asset is a detailed process. Kramer & Zitser, LLP is dedicated to determining each party’s legal ownership through collaboration with financial professionals to ensure fairness in the divorce.
Protecting Assets With a Prenuptial Agreement
One of the easiest ways to protect your wealth in a high-asset divorce is through a valid prenuptial agreement or prenup. A prenup is a legally binding contract signed before marriage that outlines how property will be divided if the marriage ends.
California enforces prenups under the Uniform Premarital Agreement Act, provided the prenup is legally valid. A prenup can make complex divorces much simpler. Here at Kramer & Zitser, LLP, we regularly review and are able to use legally valid prenups to streamline the divorce process.
Child Custody and Spousal Support in High-Asset Cases
In Santa Monica, spousal support, or alimony, is determined based on a number of different factors under California Family Code Section 4320. A few of these factors can include:
- How long the marriage lasted.
- Each spouse’s ability to earn income and keep up the standard of living they had during the marriage.
- Whether one spouse helped the other advance their education or career.
- How much can the paying spouse afford based on their income and property?
- Each spouse’s health, age, and whether the financially supported spouse can work without harming the care of the minor children.
Alimony can be modified if circumstances change, such as a significant drop in income. Kramer & Zitser, LLP, evaluates each client’s financial circumstances and prepares evidence to support or challenge spousal support awards.
Dividing Santa Monica Real Estate Under the Moore/Marsden Rule
Between 2022 and 2023, 111,894 marital cases were filed in California. One of the biggest parts of the divorce process is the division of real estate. Because of this, California courts often follow the Moore/Marsden rule, which provides a formula that calculates how much of the property is considered community property and how much is considered separate property.
For example, if the home was bought by one spouse before getting married but future mortgage payments were made using joint marital funds, the non-owner spouse could be entitled to their proportional share of the home under the Moore/Marsden rule. In high-value divorces involving homes, investment properties, or businesses, this rule can affect how hundreds of thousands, or even millions, of dollars are divided.
If there’s disagreement over the property’s worth, a professional appraisal is typically necessary to determine fair market value. Beachfront properties and investment units often exceed several million dollars, with the median home value in Santa Monica in 2023 being 1.81 million. Understanding the Moore/Marsden formula is essential to ensure a fair division of property in high-asset cases.
Risks of Financial Oversights in High-Asset Divorces
A major mistake in any divorce, especially high-asset divorces, is failing to fully understand the family’s financial position. Many people may underestimate the full value of their investments or income streams, which can lead to an unfair division of assets during divorce. Clients involved in complex divorce cases may unknowingly weaken their position by:
- Failing to gather complete financial records.
- Underestimating the complexity of property division.
- Relying on informal agreements without a divorce attorney overseeing the process.
In cases where titles are unclear or accounts are jointly held, property ownership could be documented incorrectly. Small errors in reporting or valuation can have huge financial consequences.
Consulting professionals early in the divorce process can help prevent mistakes from happening. Kramer & Zitser, LLP, helps clients build records from the very beginning of their case and contacts professionals to help evaluate assets.
Dividing Retirement Accounts During Divorce
Many divorces involve the dividing of retirement accounts such as pensions, 401(k)s, and IRAs. These accounts often have both community and separate property, depending on when the contributions to the accounts were made and with what funds. Contributions made before the marriage are separate, while those made during the marriage are typically considered community property.
To divide these accounts legally, a Qualified Domestic Relations Order (QDRO) is required. A QDRO is a court order that allows for retirement funds to be split between spouses without tax penalties or early withdrawal fees. However, it cannot require the retirement plan to provide benefits or payment options that the plan doesn’t already offer.
If the spouse without the retirement plan receives money through a QDRO, they report it on their taxes as if they were the plan owner. They’re also given a proportional share of the plan’s original investment cost. In many cases, a spouse or former spouse can deposit their QDRO distribution to another retirement account without paying taxes immediately. Payments made to children or dependents are taxed to the original participant.
Business Valuations During Divorce in Santa Monica
To properly determine the financial value of a business during a high-asset divorce, both parties must submit a separate valuation. For example, a dental practice or media company has to be valued not just based on its income but also on expected growth.
These valuations may be settled during court proceedings or through a private settlement. These cases often lead to disputes that must be settled by professional testimony. Under California law, the court must divide community property equally unless both parties agree otherwise. This can mean awarding one spouse a business while providing the other spouse with similar-value community property.
The Importance of Working With Our Firm
Our firm works with valuation professionals and tax advisors to help ensure that there is a fair division of property. If you are in Santa Monica and facing a high-asset divorce, Kramer & Zitser, LLP can help protect your property and financial future. Our combined experience of two Senior attorneys can help guide you throughout the entire divorce process. Contact our Los Angeles office today to speak with our legal team about your case.
