Unfortunately, the very assets you worked so hard to accumulate during your marriage may become the very things that make your divorce highly complex and bitterly contested. While every divorcing couple likely has issues surrounding child custody, support and visitation and spousal support, high-asset couples potentially face many more issues than other couples when it comes to dividing the marital property.
Keep in mind that California is one of the community property states, meaning that you and your spouse, by law, jointly own all the assets accumulated during your marriage, regardless of which of you actually acquired them or whose income paid for them. The same holds true for your marital debts. You must therefore split all such assets and debts 50/50 when you divorce.
Distinguishing community and separate property
One of the most contentious issues between divorcing high-asset couples often becomes how to distinguish which assets are each spouse’s separate property and consequently not part of the property settlement agreement. Oftentimes what originally was one spouse’s separate property becomes commingled with marital property. For instance, if you owned a piece of real property prior to your marriage, but made its mortgage payments out of monies you earned after you married, that property is now quasi-marital property. Generally this means that the property’s increase in value since the time of your marriage is, in fact, marital property that you must evenly divide when you divorce.
Joint business ownership
Another complication facing many divorcing high-asset couples is how to handle the business they own jointly. If you and your spouse own one, will you sell it and split the proceeds? Or will one of you buy out the other’s interest? In that case, the staying spouse will need to give the leaving spouse sufficient nonbusiness marital property to offset his or her business share or devise some other method of payment.
Other complications can be how to split up high-value investments, pension or retirement accounts, deferred compensation packages, etc. Sadly, the possibility of hidden assets also plays a large role in many contentious high-asset divorces.