Divorce in California: A Strategic Overview for High-Net-Worth Couples

After more than four decades practicing family law in California, I’ve learned this: when substantial assets are involved, a divorce isn’t just a personal matter it’s a legal and financial turning point that demands a reasoned strategy. Here’s what high-net-worth individuals need to know when approaching divorce in California, not just the law, but how it plays out when the stakes are high.

Understanding What “Community Property” Really Means

California’s community property rules are often misunderstood. At a glance, it looks simple: assets and debts acquired during marriage are split 50/50. But when you’re dealing with complex investments, business interests, trusts, or multi-property portfolios, that division gets far more intricate.

What matters most is how, when, and with what funds those assets were acquired. A business that was started before the marriage might now have a community component. Rental properties may be tied up in LLCs. Even how titles are held can complicate the picture.

Valuation becomes a central issue, and in most cases, you’ll need professionals like forensic accountants and appraisers to provide solid numbers the court will accept.  It is also important to consider the taxation that may be incurred with the sale or transfer of an asset.  Often there is an equal division of pretax assets such as most retirement accounts and pensions, and then separately consider an equal division of the other assets and debts.

Protecting Separate Property In High-Net-Worth Divorce: Documentation Is Key

Separate property includes what you owned before marriage, anything you inherited, and gifts that were given specifically to you. But it’s not always enough to say, “That was mine before we got married.”

Assets often become mixed for example, a home you bought before marriage might’ve been refinanced using joint funds, or a separate investment account might have received community contributions. To protect your claim, you’ll need to show clean records and, if needed, provide tracing through an expert.

Without proper proof, even clearly separate assets can become vulnerable during division.

Reimbursements, Credits, and the Details

There are several tools in California divorce law that can shift the financial balance, but only if you know to ask for them.

Let’s say you used money from an inheritance to help buy the family home. You may be entitled to reimbursement for that separate property contribution. Or if you paid the mortgage on a jointly owned property after separation, you could qualify for what’s called an “Epstein credit.” On the flip side, if your spouse stayed in the family home alone, you might assert a “Watts charge” for the rental value of your share.

These are not automatic. They must be carefully calculated, backed by records, and presented clearly.

The Power of Automatic Temporary Restraining Orders in Divorce

Few people realize that from the moment a divorce is filed and served, a set of automatic temporary restraining orders (ATROs) go into effect and they are enforceable.

These orders restrict both parties from moving or hiding money, changing insurance policies, or taking children out of the state without permission. It’s not uncommon for people to unintentionally violate these which can lead to court penalties or damage your credibility in front of a judge. Before making any financial moves, consult your attorney. Timing and transparency matter.

Child Custody in High-Net-Worth Divorces

Custody decisions are guided by one standard: what’s in the best interest of the child. In high-income families, lifestyle and opportunity are rarely the issue, it’s usually about time, access, and stability.

Courts look closely at parenting roles prior to separation, school schedules, and whether one parent travels extensively for business. Courts will, however, consider the fact that divorce is a significant transition, and a previously less involved parent may step up and take a more involved role with the children. In some cases, especially when conflict runs high, a custody evaluation by a mental health professional may be ordered.

Keep in mind that California laws do not require the court to presume that the best interest is to divide the time with each parent equally but be prepared if that is not in the children’s best interest to be able to specify why not. The law does support substantial involvement of each parent.

Support: Child and Spousal

Support is another area where numbers can be deceiving.

Child support is based on a formula, but when income includes stock options, business distributions, or international assets, it takes skilled advocacy to determine what is actually includable in the formula. The formula can be rebutted in some circumstances in favor of a number that is higher or lower such as with an “exceptionally high” income earner where the formula may produce a number well in excess of the needs of the children.

Spousal support allows for much more discretion and other than temporary support order paid while the divorce is pending, is not a convenient formula but an intricate analysis of multiple factors the legislature Courts consider.

For high earners, support negotiations often revolve around sustainability and fairness, not just what the calculator says.

Attorneys’ Fees and Sanctions

Even in cases where both parties have significant means, one may be required to help cover the other’s legal fees, depending on income or wealth disparity. The goal is to ensure both sides can engage competent representation.

Sanctions are another factor. If one party is found to be hiding assets, delaying discovery, or otherwise acting in bad faith, the court has the power to impose financial penalties. In high-net-worth cases, these sanctions can be steep and strategically useful if you’re on the receiving end of misconduct.

Preparing and Protecting Yourself in a High-Net-Worth Divorce

Divorce is one of the most life-altering decisions a person can make, and for high-net-worth couples the stakes are often considerably higher. Hopefully, this guide helps you start to understand the complexity of a high-net-worth divorce and why competent professions are critical to reaching a just outcome. With forty years of family law and high net worth divorce experience, I have expertise and acumen to protect your interests, negotiate or litigate resolution, and secure your future after divorce. Contact me today for a legal assessment of your situation, review your liabilities, and help you plan your next steps with confidence.