Determining “separate” property in California is often times one of the most difficult tasks involved in a high asset value divorce.  It is incumbent upon the attorney to determine what is “separate” property and what is “community property.” 

Absent a valid pre-marital agreement, the marital rights of persons who live in California are fixed in accordance with the California property law.  Generally community property is divided equally. 

Separate property is excluded from the community property and is awarded to the owner.  “Separate property interests” include property owned before marriage, property acquired during marriage by gift bequest, inheritance and profits of such property. 

Characterizing the status of property interest as “community” or “separate” property is the foundational starting point for the resolution of marital property rights. The type of ownership of assets, such as the joint or individual ownership must be determined. 

Issues concerning refinancing of any of the assets during the marriage and use of the proceeds from the refinancing must be carefully considered.  Additionally, both before and during marriage, property can be subject to what is called, “transmutation” which is a transaction or an agreement that works a change in the character of the property. 

The issue of the parties’ fiduciary duties towards one another in managing marital assets may also become an issue in a complicated high asset value divorce.  This is especially true in the difficult financial times that now exist with values of assets declining. 

Questions about whether one spouse’s management of the business has been proper may be an issue.  Where property is determined to have been separate property, there is also an issue of how to allocate profits generated during the marriage from separate property. 

Each of these topics involves critical analysis and the financial skills of the attorney is essential to thoroughly understand the classes of assets involved. 

Take Away: Without an extensive business, real estate, and financial background, the attorney is often lost and of little benefit to you in the divorce.