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Complex Assets in California Divorce: How to Divide Them

Complex Assets in California Divorce How to Divide Them

There is no single definition of the term “complex asset,” but this phrase often pops up in California divorces. The truth is that a complex asset can be just about anything that is difficult to divide. The “classic” definition is an asset with a high value that is difficult to assess accurately. On the other hand, assets with relatively low value can also be challenging to divide – especially when you consider the sentimental nature of certain items or property. Fortunately, there are a number of effective strategies that can help divorcing spouses in California divide even the most complex assets.

Because of the complex nature of these assets, each one must be approached in a different way. By catering your strategy to the specific characteristics of each asset, you can achieve positive results. In order to do this, you need to learn more about each type of complex asset and the unique challenges they may pose as you approach divorce.

Real Estate –  Real estate is not only one of the most common assets in California divorces, but it is also one of the most complex. If spouses need to divide just one property, this is typically referred to as the “family home.” The family home then becomes wrapped up in child custody, as family courts generally want to keep any children in the family home to minimize stress. Therefore, the parent who walks away with sole ownership of the family home may be automatically more likely to win primary custody of the children. This is just one factor that makes real estate complicated during a divorce.

If spouses own multiple properties, the situation can become even more complex. For example, they may own a rental property that provides a steady source of passive income. Calculations regarding the property’s value may need to take this rental income into account. The rental property may be seen as a business, especially if spouses own multiple rental properties. Spouses might own a vacation home or a cabin in another state. In some ways, owning multiple real estate properties allows for easier division, however. This is because each spouse can take an equal number of properties instead of dividing a single property.

Figuring out how to divide a single property can be challenging. Here are a few of the options:

  • Sell the property and split the proceeds equally
  • Continue to co-own the property
  • One spouse “buys out” the other’s stake in the property by providing them with assets equivalent to half the property’s value. This is also known as “trading” assets.

The best approach depends entirely on your unique circumstances.

 Businesses – Family businesses can be incredibly complicated to divide. There are many factors to consider, including:

  • Who started the business
  • The contributions of each spouse to the business
  • The structure of the business (corporation, LLC, sole proprietorship, partnership, etc.)

Spouses who have started their own businesses typically want to keep these operations running. The family business might be something that they are extremely passionate about. But if one spouse insists on “getting their fair share,” they may have no choice but to sell the business.

It might be possible to continue to co-own the business after the divorce, especially if spouses are capable of continuing an amicable relationship. A business’ current value may be negligible compared to its ability to provide a reliable source of income in the future. Spouses may also buy each other out of their share in the business.

Pets and Other Sentimental Assets – Although there are many other examples of complex assets, let’s cover examples that are relatively low-value. Despite the fact that a dog or a cat might only be worth a few hundred dollars, spouses in California often fight tooth and nail to keep their pets. Pet owners understand that having continued access to their pets is priceless. Negotiations in this area can be incredibly difficult, as neither spouse may be willing to back down. In the end, litigation may be the only option to “divide” pets. In some cases, judges may even order that the pet be sold because there is no other viable way to deal with the situation. The same logic applies to virtually any other sentimental asset – including family heirlooms, collectibles, and so on.

Complex Assets vs. Complex Divorce – Complex assets and complex divorce often go hand in hand, but these concepts are slightly different. A complex divorce generally involves spouses with collective net worths of over $1 million and a number of high-value assets. These spouses may also earn high incomes – perhaps in the six or seven-figure range. Because of the wealth within the marital estate, special, “complex” considerations must be taken into account during a divorce.

On the other hand, a complex asset might not necessarily be part of a high-value marital estate. As you will see, there are some complex assets that are low-value. Conversely, a complex, high-net-worth divorce might involve only “simple” assets with no complexity.

What is the Best Strategy for Dividing Complex Assets?

Generally speaking, the best strategy for dividing complex assets is to avoid the litigation process. Shrewd spouses can work out their differences behind closed doors through mediation or collaborative law. This allows them to take control of property division rather than leaving important decisions up to a judge. This collaborative, cooperative approach usually serves everyone’s best interests. That being said, it is not always possible. All it takes is for one spouse to stubbornly refuse to engage in negotiations, and the divorce must be litigated. In this case, spouses have no choice but to employ strategies specifically geared toward a full-on divorce trial.

Where Can I Find a Qualified Family Law Attorney in California?

 If you have been searching for a family law attorney in California who can help you divide complex assets, look no further than Milligan, Beswick, Levine & Knox, LLP. Over the years, we have helped numerous divorcing spouses – including those who need to divide complex assets. We know that these situations require a careful, strategic approach. With our help, you can determine the best possible solution and work towards financial security in the most efficient way possible. Remember, internet research can only get you so far. Book your consultation today to receive targeted, personalized advice based on your specific situation.

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Stephen Levine, is a Board Certified Specialist in Criminal Defense — an honor achieved by only the top criminal law attorneys in California. Mr. Levine has over 40 years of experience in criminal defense and family law serving Southern California, and is a highly regarded Super Lawyer as well as AV Rated attorney.