Should You Liquidate or Split Complex Assets in Divorce?

Asset division is one of the most complicated aspects of a divorce case in California. Even if you and your ex-spouse agree to a 50/50 split, property division can be difficult if you have complex assets such as investments, stocks, real estate or other properties that will change value over time. A potential solution to dividing these types of assets during a divorce is to liquidate them rather than split them as-is. If you are not sure whether to split or liquidate your complex assets, work with an attorney.

Calculate the Current Value of Your Assets

Start by gaining a solid understanding of what your marital assets are currently worth. Marital assets, also called community property, are all the assets and debts you and your spouse acquired together after marriage. These are the assets you or a judge will divide during a divorce. Property division does not include separate property, or assets you acquired before your marriage.

Gather current information about the values of your marital assets to better understand what you have to gain or lose. Work with financial experts for each type of asset. If you share a real estate investment with your spouse, for example, get a professional appraisal to understand the full, complete and accurate value of the asset. It is especially important to get the current value of fixed assets that will not appreciate or depreciate over time.

Look Toward the Future

Calculating current value is important, but it will not tell the whole story if you and your spouse share assets that will change value over time. It is key to calculate future values in these cases. You will need to consider what your home, stocks or investments could be worth in the future to fully understand the value of your shared assets. Understanding the future values of your assets can help you decide whether it is in your best interests to split or liquidate them during the divorce.

Talk to Your Spouse

Liquidating your assets works by exchanging noncash assets, such as stocks and real estate, for cash. Liquidating can be easier than splitting complex assets if you and your spouse are trying to achieve a 50/50 split. Liquidating shared assets will give you a simple dollar amount to split rather than trying to divide something like a joint mortgage or retirement benefits.

Liquidating your assets also means you are no longer responsible for them. You and your ex-spouse will no longer have to work together to maintain a rental property, for example, or keep up with the legal requirements surrounding a complex asset. Your name will no longer be on a loan in terms of debt. You will receive the cash value of the asset and be able to walk away. The downside, however, is that you could potentially lose money on the future foreseeable appreciation of the asset.

Discuss your goals and concerns with your spouse during your divorce case. You both might agree that it will be easier to liquidate complex assets and split the cash down the middle. If you do not want to liquidate, your spouse may be willing to work with you to arrange a different type of property division. You may be able to keep 100% of the asset in question, for example, if your spouse can keep 100% of an asset of similar value, or if you offer to absorb marital debts in exchange.

Hire a Divorce Lawyer

A divorce lawyer in California can help you and your spouse work through complex asset division issues, including whether to split or liquidate assets. A lawyer can help you with processes such as mediation so you and your spouse can avoid a divorce trial while still coming to an agreement on how to divide complex assets. What will be best for you will depend on your assets, their potential for growth, and you and your spouse’s specific goals.