When California couples get a divorce, they usually have to separate all of their assets. This process may get a little complicated when it comes to separating financial assets, especially when couples have investment accounts. When people divide their investment accounts, there are a few things they should keep in mind.
When divorcing couples consider their investment accounts, it is important for them to distinguish between their marital and separate accounts. According to NuWireInvestor.com, if one spouse opened new investment accounts during the marriage, then a court typically divides these accounts between the couple. This is because the assets people gain during their marriage are generally considered marital property. If one spouse brought investment accounts into the marriage, then these accounts are usually separate property. Most of the time, couples do not have to divide these assets. There may be some situations, though, when separate assets become marital assets, so it is a good idea for people to look over California laws.
There are many ways couples can divide their investment accounts. Fidelity Investments says some people may want to divide the shares equally. Couples who have 40 shares of a particular stock, for example, would each get 20 if they decided to do this. If people decide to split their investments this way, it is important for them to also consider the cost basis if they did not purchase these shares all at once. This is because people usually have to pay taxes if their stock is now worth more than the original purchase price. Some couples may want to make sure they split the cost basis as well to make the divide truly equal.
Divorcing couples may also choose to sell all of their investments. In this scenario, they typically do not have to worry about dividing shares and the cost basis equally. Instead, people would usually split the proceeds from the sale. However, they still will likely have to consider the effect this sale might have on their taxes.