Everyone hopes that the assets he or she possesses will increase in value over time. Whether it's real estate, art, collectables, a business venture or stock portfolio, everyone hopes to see a return on his or her investment. In this way, one can hope to increase one's net worth and enjoy the fruits of wise and/or fortunate acquisitions.
If you're going through a divorce, suddenly those increased values can become an incredibly important aspect of the proceedings. You may be wondering who will get to keep the assets and what role an increased value might play in determining the division of assets. Property division in California is an iceberg of which most people only see the tip. Here is a look that probes a little further below the surface.
The basics of California marital property
California is a community property state. The total value of all marital assets, which is everything acquired during the marriage, is determined, and that value is split evenly between the two parties.
Property acquired before the marriage is separate property. Separate property remains in the possession of the original owner and is not part of the valuation of the assets.
An increase in value of an asset may be community property
Normally, the increase in value of an asset is community property and subject to division even if the asset is separate property. This means that your spouse may receive assets equal to the current value of the separate asset in question. It does not mean, however, that he or she has any claim to the asset itself.
It can be argued in certain circumstances that an increase in value was passive, meaning the asset naturally went up in value without any effort put forth by either spouse. For example, a piece of art may appreciate over time due to changes in the market. Passive appreciation may not necessarily count towards the total value of the community property.
On the opposite side of the coin, a spouse may argue that an asset gained in value through active appreciation. This might include restoring an antique, improving a home or working extra hours at a business. Active appreciation is a part of the overall value of the marital assets.
Don't leave the division of your assets to chance
As may be seen, the matter of marital assets and their division during a California divorce can be a complicated one. Asset division is a crucial part of any high-asset divorce, and may set the stage for your financial future. This is not a time to leave anything to chance.
A knowledgeable and extremely thorough lawyer can help you retain what should rightfully be yours. Rather than risk an unsatisfactory division of your holdings and possessions, it may be best to let a professional guide you through this legal minefield. There may be great things waiting for you on the other side.