Getting a divorce is never an easy process, but in situations where there are valuable assets, business entities, and other accrued wealth, the situation can get much more complicated. A high-asset divorce can have a long-term impact on individuals, depending on the initial financial steps taken during the process. For Sacramento residents, being informed about how California divorce law handles property and being proactive in protecting what you have accumulated is an important step in the process. The Sacramento, CA, divorce lawyers at Wagner Family Law are experienced with “high-asset divorces” and can help you protect your financial future.

What is considered a “high-asset” divorce?

High-asset divorces tend to be those that involve a couple whose total assets include complex and large assets, such as:

• Closely held businesses and professional practices

• Real estate portfolios or income-producing properties

• Stock options, RSUs, and executive compensation

• Pension funds and retirement savings accounts

• Portfolios of investments, cryptocurrency, or equity

• Valuable personal property (art, jewelry, collectibles)

These cases are not merely concerned with splitting and allocating bank accounts. Often, disputes about valuation, tax implications, and what does or does not constitute joint versus separate property are also involved.

Understanding California's community property rules

It should be noted that the State of California is considered a “community property” state. This means that all property owned as well as all debts acquired during the marriage are considered jointly owned by both parties. At the time of the divorce, the couple will divide all community property equally. Thus, every member gets an equal share.

On the other hand, not everything you own is subject to division. “Separate property” includes property that was brought into the marriage, inheritances, or gifts to only one party. These remain with one part if the asset can be identified and traced. 

Disputes can emerge in high asset cases. These often involve questions about whose estate a property belongs to. In some cases, individually owned assets can be commingled with marital property, muddying the water. 

Identify and document your assets early

One of the key steps to safeguarding your assets involves having an understanding of the things that actually belong to you. It's a good idea to have the following information available before or at the time of your divorce.

• Bank statements

• Brokerage statements

• Retirement statements

• Financial documents of a business

• Taxes

• Real estate deeds, mortgage statements, and appraisals

Accurate recording can go a long way in identifying whether an asset is “separate” property or “community property.” It can prevent future conflicts in your divorce case.

Be careful about commingling assets

Commingling of funds happens when the couple combines the separate and community funds. For example, a party may place their inheritance in a joint bank account or use the income earned in the marriage to pay a mortgage on separate property.

In California, commingling of property does not automatically change separate property to community property, but it might make tracing extremely hard. If this happens, the court might consider the property to be community property.

In the case of a high-asset divorce, advanced financial analysis needs to be performed in an attempt to track the funds. It is in these instances that having an experienced Sacramento divorce lawyer is essential.

Protecting business interests and professional practices

Ownership of a business can also make divorce much more complicated. Even if your spouse never participated in the management of the business, the business can be found to be partially or fully community property if it was started or accumulated during the marriage.

Key issues include:

• Determining a fair market value for the business

• “Enterprise goodwill” versus “Personal goodwill”

• Whether the other party's work added value to the business

Often, owners want to retain complete ownership and compensate the other spouse through an offset of other property or through various payment arrangements.

Understanding the tax consequences of asset division

Not all assets are created equal, especially when it comes to taxes. A retirement or pension account, for instance, may have a different after-tax value than cash or real estate. High-asset divorces commonly entail:

• Exposure to capital gains

• Tax-deferred retirement plans

• Stock options that have vesting schedules

• Stock options

• Contingent liabilities

What appears to be a fair allocation on paper may not be quite as balanced once taxes are considered. Strategic planning helps eliminate unpleasant surprises.

Consider pre- or postnuptial agreements

Having a prenuptial or postnuptial agreement in place can be an important part of a divorce strategy, and it can play a crucial role in keeping your property safe. These agreements can determine what property should be treated separately, how one's income is treated, and if one spouse is entitled to alimony.

Even if there is an agreement in place, its enforceability can still be disputed. In this case, courts check if there has been disclosure, fairness, and if both parties have had independent legal advice when they signed the agreement.

Avoid costly mistakes during the divorce process

In a high-asset case, there can be a lot of emotion involved. But acting on emotion can sometimes be harmful to your finances. Major mistakes include:

• Hiding assets or failing to disclose information

• Engaging in large money purchases or transactions during the divorce

• Disregarding an injunction order

• Dependence on informal understandings without legal advice

You must be as transparent as possible. Failure to disclose assets could result in legal consequences. 

Why experienced legal guidance matters

Divorces that involve substantial assets require more than the fundamentals of the law. In most cases, coordination with forensic accountants and tax specialists can be necessary to ensure that issues important to you have been taken care of.

A seasoned California family lawyer may:

• Accurately identify and categorize assets

• Take precautions in cases involving separate property

• Campaign for fair valuation and division

• Come to mutual agreements based on financial need

Talk to a Sacramento, CA, Divorce Lawyer Today

If you're getting divorced and have substantial assets, you need to be careful about how you move forward. The high-asset divorce attorneys at Wagner Family Law can help protect your wealth and ensure your interests. Call today to learn more.