During a divorce in the state of California, if you own substantial property and assets, you can potentially lose a great deal in a contested divorce proceeding. When a divorce becomes final, the division of property and assets, the possibility of alimony–or spousal support–payments, and the obligation of child support may put what is yours at risk.
High net worth divorce cases can be exceedingly complicated and don’t automatically mean that you’re going to lose half of everything. At Zech Law, we know what it takes to help you protect your assets, including stocks, bonds, retirement accounts, inheritances, businesses, and immovable property holdings in the absence of prenuptial agreements.
High net worth divorces often involve business professionals and entrepreneurs. Typically in a California divorce, when there is a dispute regarding marital property and assets, the courts will divide that property and those assets in half. But for business owners of either gender, the idea of losing half of the business you’ve built is deplorable. How can a business survive if it loses half of its value?
In a California divorce, businesses are first “characterized” and then “valued.” Characterization determines if the business is community property, personal property, or a combination of both. Valuation determines what a business is worth. Characterization is typically more difficult than the valuation process because so many questions must be answered by the court. Did you inherit the business or start up the business before or after the marriage? If you inherited, did you receive all of the business or was it split among several heirs? Are you in business with one or more partners?
Even if your business started up during the marriage, that doesn’t mean you should assume the business is community property. If you started the business with your own resources, it may affect the characterization of the business. If you are a California business owner, do not be tempted in a divorce to do something foolish or illegal to make your business look less profitable or your income less substantial. That is not the way to go and leads to a number of additional issues you must address.
Extensive real estate holdings can also complicate a divorce in California. Many married couples are homeowners, but many couples also jointly own commercial properties, investment properties, farmland, cabins, and vacation homes. In a California divorce, every piece of real estate is presumed to have value, and the fair, equitable division of real estate holdings can easily become the most complicated issue in a high available means divorce.
Arriving at an agreement with fair and equitable division of real estate holdings can be genuinely challenging. The first problem with real estate is determining its precise value. The fluctuating nature of real estate markets and other economic factors can sometimes make it quite difficult to be exact. A second problem is determining if a property will be sold or if it will be retained by one spouse in exchange for some other consideration in the divorce settlement. Location, market conditions, and the amount of debt owed on a property are all elements to be considered. However, property acquired by one of the individuals in the marriage as a gift or as an inheritance is usually not considered a joint marital asset in California and not subject to property division.