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Stock division in California divorce

On Behalf of | Feb 11, 2022 | Blog, High Net Worth Divorce

Couples looking to divorce in Antioch and the surrounding areas likely have several highly valued assets they need to divide. If you own stock options, you need to contend with them during the divorce process.

California follows community property law, meaning you must equally divide any property you gained during the marriage between you and your spouse. Exceptions include gifts or inheritance you obtained during the marriage.

Vested and unvested stocks

When it comes to stocks, the main factor determining whether your spouse gets half is your purchase timeframe. If you bought stock or received stock options during the marriage, your earned profit falls under marital property. In addition, unvested stocks you obtained before the wedding and vested during the marriage are marital property.

Improvements to the business

The good news is that any dividends or increases in value you earn on stocks purchased before your marriage do not count as marital property. It does not matter if you have associations with the company. However, if you put significant efforts into improving a company’s stock and improving its value, the courts may consider this community property. The amount of value your spouse has an entitlement to is proportionate to the effort you expended on increasing it. This is a complicated and imperfect process, so it is in your best interest to hire an attorney experienced with high asset divorces.

Splitting stocks in a divorce is complex. Without the help of experienced attorneys, you likely will lose out on stock earnings to your spouse. If you are in the middle of a divorce or separation, start documenting the timeframe of your stock options now to make your life easier.

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