Community property or Separate property ?

[Paul_Martell101]

The community is entitled to reimbursement for the marital funds used to exercise the options.

Marital funds used to exercise options: 60K
Gain resulting from the selling of the stocks after options was exercised with the marital funds: 200K
Taxes paid: 60K
gain: 140K
40K used for down paymenton the house
is the community entitled to the remaining of the gain (100K)

 

[LdiJ]

The community is entitled to reimbursement for the marital funds used to exercise the options.

Marital funds used to exercise options: 60K
Gain resulting from the selling of the stocks after options was exercised with the marital funds: 200K
Taxes paid: 60K
gain: 140K
40K used for down paymenton the house
is the community entitled to the remaining of the gain (100K)

If the community got back the 60k used to exercise the options, then my answer would be no.

Also, on your question of how could an entity purchase and item and not own it?....my answer is another question.

If a mortgage company lends money to buy a home, and then the mortgage is paid back in full, does the mortgage company own the home? Of course not.

I am starting to feel very little sympathy for you. You have been married a very short time and seem awfully hot to get your hands on assets that clearly were hers prior to the marriage. You are being pretty greedy in my eyes. The community has already signficantly benefited by the 40k put into the house.

 

[tranquility]

No. Reimbursement is without interest. The community is entitled to 60K with 30K being your half. The taxes on the gain is a sunk cost and no reimbursement is given.

The gain on the stock option is separate property. I have a question for any gain after the option is exercised, but since you are talking about cash--I bet the stock was quickly sold and there was no appreciation while in her (your) hands.

Each thing is separate. You will get into a morass of confusion when you start bringing together all the issues at once. While judges tend to split things up in a long marriage, since yours is so short, community property is a calculation machine. Each asset is calculated and then you move on to the next asset. By conflating down payment with options in the same calculation, you will get to bad places quickly.

Edit:
LdiJ wrote:
I am starting to feel very little sympathy for you. You have been married a very short time and seem awfully hot to get your hands on assets that clearly were hers prior to the marriage. You are being pretty greedy in my eyes. The community has already signficantly benefited by the 40k put into the house.

I agree with one proviso. With the way the accounts were working out and the like, joint/separate etc., I'm thinking she knew what she was doing from the start. She kept her cards close and played them well.

 

[Paul_Martell101]

to Lidj

I think you are not objective. It does not matter who feels what for whom.
BE OBJECTIVE. This is not a political debat.

to tranquility:
the way the accounts were working out and the like, joint/separate etc., I'm thinking she knew what she was doing from the start. She kept her cards close and played them well.
ISN'T NICE? But we all know that women are after love when they marry, and the men are the one who are "greedy" right Lidj?..sorry I should stay objective and just accept the outcome.
Thank you very much to all of you. It was a very informative Q&A exchange. I hope it will profit someone else.

 

[fairisfair]

to Lidj

I think you are not objective. It does not matter who feels what for whom.
BE OBJECTIVE. This is not a political debat.

to tranquility:
the way the accounts were working out and the like, joint/separate etc., I'm thinking she knew what she was doing from the start. She kept her cards close and played them well.
ISN'T NICE? But we all know that women are after love when they marry, and the men are the one who are "greedy" right Lidj?..sorry I should stay objective and just accept the outcome.
Thank you very much to all of you. It was a very informative Q&A exchange. I hope it will profit someone else.

Not legal advice, but I have to agree with ldij, I left this post, as I was beginning to see you as a poster child for prenuptials

 

[Paul_Martell101]

The gain on the stock option is separate property.

I agreed with everything you said before. But here it does not make sense. What if there are losses instead of gain??

Who would pay for the losses? the community ?(or if you want her using "HER" earnings, which by now we pretty much agree that they are community funds). Where would she get the funds from if not from "her" earnings (community earnings) to pay for the losses?

So would it be ok for her to make gain, and be a separate property, but the losses would be then paid by the community ?

 

[fairisfair]

The gain on the stock option is separate property.

I agreed with everything you said before. But here it does not make sense. What if there are losses instead of gain??

Who would pay for the losses? the community ?(or if you want her using "HER" earnings, which by now we pretty much agree that they are community funds). Where would she get the funds from if not from "her" earnings (community earnings) to pay for the losses?

So would it be ok for her to make gain, and be a separate property, but the losses would be then paid by the community ?

who do you pay when a stock loses value?? and futher, if her options were now of no value, would you be asking to pay her half of what they once were worth??

 

[Paul_Martell101]

The taxes on the gain is a sunk cost and no reimbursement is given.

This would mean that the community would pay taxes for a gain that the community never achieved? Make no sense either.

 

[Paul_Martell101]

would you be asking to pay her half of what they once were worth??

I am not asking her to pay anything. You do not get my point -->the reward for investing money by the community should be returned to the community. It is not me against her. I am talking about the community.

 

[Paul_Martell101]

all of this is similar to a business owned by one spouse before the marriage--> if the business appreciates during the marriage due to the effort and investments of the community, the community is entitled to the business appreciation.

 

[fairisfair]

would you be asking to pay her half of what they once were worth??

I am not asking her to pay anything. You do not get my point -->the reward for investing money by the community should be returned to the community. It is not me against her. I am talking about the community.

You did not answer my question, if the options were now worthless, would YOU be asking to pay HER for half of their previous worth??

Wrong, when you are married it is about the community, divorce is definitely you against her.

 

[fairisfair]

again not legal advice

all of this is similar to a business owned by one spouse before the marriage--> if the business appreciates during the marriage due to the effort and investments of the community, the community is entitled to the business appreciation.

I have a feeling that this is exactly the kind of crap that got you to this point in the first place. Dang, and it still seems so strange you have NO QUESTIONS about YOUR assets to the "community"

 

[Paul_Martell101]

Wrong, when you are married it is about the community, divorce is definitely you against her.

So you are saying that for divorce purpose, the only state that exists is separate community...So why there is all this classification and calculation about community and separate property?
The community in terms of assets distribution still exists at least up to the final divorce judgement.

 

[tranquility]

all of this is similar to a business owned by one spouse before the marriage--> if the business appreciates during the marriage due to the effort and investments of the community, the community is entitled to the business appreciation.

This statement is so imprecise so as to be meaningless. There is substantial case law regarding these issues and the result is never that the community is entitled to the business appreciation. If the facts are right, the community may be entitled to a portion. I wouldn't go too far on "similarity" to other facts here as the area is fairly well litigated. (It's funny how divorce brings out the best of people.) When you start talking about things being similar, you better be aware that the specific thing has not already been decided.

The taxes on the gain is a sunk cost and no reimbursement is given.

This would mean that the community would pay taxes for a gain that the community never achieved? Make no sense either.

It's called a gift. Like the deed of the house, the return *signed by you* could be considered a writing that transmuted the assets. (That is, if there weren't specific cases on point for the treatment of the payment of taxes.) If you cared, you should have dealt with this issue at the time of payment, not now at divorce.

The gain on the stock option is separate property.

I agreed with everything you said before. But here it does not make sense. What if there are losses instead of gain??

I am assuming the option plan was a non-qualified plan where there was no readily ascertainable value for the options and, hence, cost nothing. If the stock value was less than the option, why would one exercise the option?

Who would pay for the losses? the community ?(or if you want her using "HER" earnings, which by now we pretty much agree that they are community funds). Where would she get the funds from if not from "her" earnings (community earnings) to pay for the losses?

*Now* pretty much agree? Is your desire for more bent your understanding so much to think anyone has not felt her earnings were community property from the start? To make the comment, it becomes clear you are not understanding or believing what is being told you. Why don't you give us the basis for your erroneous belief so your specific errors can be corrected?

 

[fairisfair]

Wrong, when you are married it is about the community, divorce is definitely you against her.

So you are saying that for divorce purpose, the only state that exists is separate community...So why there is all this classification and calculation about community and separate property?
The community in terms of assets distribution still exists at least up to the final divorce judgement.

I was speaking in layman's terms, not legal ones. Anyway, this thread is totally redundant, perhaps you can bore her out of her assets.