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How are stock earnings divided in a divorce?

On Behalf of | Feb 17, 2023 | Divorce |

California is a community property state, which generally means that couples need to split the value of their assets in half if they get divorced unless an exception applies to a particular asset that should be treated as separate property.

A lot of couples have significant value in stock portfolios and investment opportunities. They want their money to work for them and grow over time. If you are getting divorced and a significant portion of your wealth is tied up in stocks, it’s important to understand how California community property laws will affect your investments.

Stocks will likely need to be divided with all other assets

The short answer is that yes, stocks are considered financial assets, and the money that you made as the value went up during the course of your marriage is going to be treated similarly to any other type of marital income. As long as you and your spouse earned that income while you were married, even if you took a hands-off approach and simply left your money in a diversified account, then it is a marital asset. As a result, the value of such investments has to be split in half in accordance with California’s community property laws.

There are multiple ways to achieve this end. You can sell certain assets so that their proceeds can be divided more evenly. One spouse can also opt to retain certain assets while the other spouse retains others that are valued at the same net rate. In the case of investments, it may even be possible to split a portfolio in ways that allow one spouse to retain certain assets and the other to retain additional assets.

Researching the legal steps that are involved in California community property asset division scenarios will better allow you to understand your rights and options under the law.



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John T. Chamberlin, Attorney at Law
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