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Kathy Minella

In Divorce

Stock Options and RSUs in California Divorce: Dividing Deferred Compensation

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In high-asset California divorces, stock options and restricted stock units (RSUs) often represent a significant portion of a spouse’s compensation. These forms of deferred compensation are common in the tech, finance, and biotech industries, and they can substantially affect the division of property, especially when the assets were granted during the marriage but do not fully vest until after separation or divorce.

Dividing stock options and RSUs during divorce is one of the most complex and contested financial issues in family law. These assets may appear on pay stubs or in employment agreements, but their value, character, and timing raise questions that require detailed legal and financial analysis.

This blog explains how California courts handle stock options and RSUs in divorce, how to determine whether they’re community or separate property, and what you can do to ensure a fair division.

What Are Stock Options and RSUs?

Before diving into the legal framework, it’s important to understand what these assets are and how they function:

  • Stock Options: These give an employee the right to buy company shares at a fixed price (called the “strike price”) after a certain vesting period. If the market value exceeds the strike price, the employee can exercise the option and profit from the difference.

  • Restricted Stock Units (RSUs): RSUs are promises to grant actual company shares once certain conditions are met, typically after a set number of years or continued employment. Unlike stock options, RSUs do not require the employee to purchase the stock.

Both are designed to incentivize employee loyalty and long-term performance, often with vesting schedules that stretch across several years.

Are Stock Options and RSUs Community or Separate Property?

California is a community property state, meaning that all earnings and assets acquired during the marriage are presumed to be jointly owned. But stock options and RSUs challenge this presumption because:

  • They are earned over time, not at a single point

  • They often vest after separation, even if granted during marriage

  • Their purpose (past services vs. future incentive) can change their characterization

This creates a need to apportion the asset between community and separate property interests based on when it was earned and why it was granted.

The Key Question: Why Was the Stock Granted?

California courts focus on intent and purpose when determining whether stock-based compensation is community or separate. The key question is:

Was the stock or RSU granted as compensation for past services performed during the marriage, or to incentivize future performance after separation?

  • If it was compensation for past services, it’s likely community property

  • If it was an incentive for future work, it’s likely separate property

In many cases, it’s both. The court must then allocate a portion to the community and a portion to the individual spouse.

How Courts Divide Stock Options and RSUs: Apportionment Formulas

California courts use formulas developed in key cases to divide deferred compensation. Two of the most common are:

1. The Hug Formula

Established in In re Marriage of Hug (1984), this formula is used when the options or RSUs were granted as compensation for past services.

Hug Formula:

Community property portion =
(Date of hire to date of separation) ÷ (Date of hire to date of vesting)
× Number of shares

This method allocates the community’s interest based on how long the employee was with the company before the separation, relative to the entire vesting period.

Example:

  • Employee hired: 2015
  • Separation: 2022
  • Vesting: 2025
  • 7 years married / 10 years total = 70% community interest

2. The Nelson Formula

Developed in In re Marriage of Nelson (1986), this formula is more favorable to the separate property spouse and is used when the options or RSUs are granted as incentives for future services.

Nelson Formula:

Community property portion =
(Date of grant to date of separation) ÷ (Date of grant to date of vesting)
× Number of shares

This approach shortens the community interest to only the period after the stock was granted, rather than the full employment duration.

Courts use the formula that best matches the intent of the employer. In some cases, multiple formulas are used for different grants.

3. Gillmore/Samuelson Formula

The Gillmore/Samuelson Formula is not a single, unified mathematical formula. It is a concept in California Family Law that represents the right of the non-employee spouse to begin receiving their community property share of a former spouse’s defined benefit pension immediately, even if the employee spouse chooses to continue working past their earliest eligible retirement date.

Step 1: Determine the Community Share (The Time Rule)

The Time Rule Formula establishes the community’s percentage interest in the entire pension benefit.6 This fraction is calculated as:

$$\frac{\text{Years of Service Accrued During Marriage}}{\text{Total Years of Service at Time of Retirement}}$$

Example: If the husband worked for 10 years during the marriage out of a total of 20 years worked at the earliest retirement date, the community share is $10/20 = 50\%$.

Step 2: Determine the Non-Employee Spouse’s Share

Since California is a community property state, the non-employee spouse is entitled to one-half of the community’s share.7

$$\text{Non-Employee Share} = \frac{1}{2} \times \text{Community Share}$$

Example: $\frac{1}{2} \times 50\% = 25\%$. The non-employee spouse is entitled to $25\%$ of the benefit.

Step 3: Calculate the Immediate Monthly Payment

The non-employee spouse’s percentage is applied to the monthly benefit amount the employee spouse would receive if they retired at their earliest eligibility date.

$$\text{Monthly Payment} = \text{Non-Employee Share Percentage} \times \text{Monthly Benefit at Eligibility Date}$$

Example: If the benefit at the earliest retirement date is $\$4,000$ per month, the non-employee spouse’s immediate monthly payment is $25\% \times \$4,000 = \$1,000$.

The working employee spouse is then ordered by the court to pay this $\$1,000$ per month directly to the former spouse until the employee spouse actually retires and the pension plan begins making payments to the non-employee spouse (usually via a QDRO—Qualified Domestic Relations Order).

This right stems from two landmark California Supreme Court cases:

  1. In re Marriage of Gillmore (1981): This case established the right of the non-employee spouse to demand immediate payment of their share of the pension when the employee spouse becomes eligible to retire but chooses not to.
  2. In re Marriage of Samuelson (1988): This case clarified the calculation method for those immediate payments, linking them to the time rule formula used to divide the pension.

Understanding Grant Dates, Vesting Schedules, and Cliff Periods

Many stock options and RSUs have “cliff vesting,” meaning no shares vest for the first year or two, and then a large chunk vests all at once. After that, the remainder may vest gradually.

Example Vesting Schedule:

  • 25% after year one (cliff vest)

  • 1/48 of total every month thereafter over four years

It’s critical to identify:

  • The grant date: When the employee received the right

  • The vesting schedule: When the stock becomes exercisable or owned

  • The separation date: The cutoff for community property accrual

Even if the shares vest after separation, a portion of the value may still belong to the community.

Valuing Unvested Stock Options and RSUs

Stock options and RSUs are often unvested or illiquid at the time of divorce. Courts typically do not divide unvested shares directly, but instead:

  1. Award a percentage of the shares to the non-employee spouse once they vest

  2. Assign a value to the shares and offset with other assets

  3. Defer division until vesting occurs, using a “time rule” or formula

  4. Use a QDRO or other mechanism to divide upon sale

Valuation often requires input from financial experts who consider:

  • Current stock price
  • Strike price (for options)
  • Volatility and likelihood of vesting
  • Market conditions and potential tax consequences

It’s essential to protect your interests by having a lawyer and, when appropriate, a forensic accountant review the terms and value of equity compensation.

Tax Implications

Equity compensation often triggers complex tax consequences:

  • Stock options may result in ordinary income or capital gains depending on the type (NSO vs. ISO)

  • RSUs are taxed as ordinary income upon vesting

  • The spouse receiving the shares may incur tax liability when they vest or are sold

Divorce settlements should clearly specify who is responsible for tax consequences, and whether the employee spouse will sell shares on behalf of the other spouse or transfer vested shares directly.

These provisions must be carefully negotiated and clearly documented in the Marital Settlement Agreement.

Common Mistakes in Dividing Equity Compensation

Some of the most frequent—and costly—mistakes include:

  • Failing to identify all stock grants (review offer letters, employment agreements, pay stubs)

  • Assuming that only vested shares have value

  • Using the wrong formula or applying it inconsistently

  • Ignoring future vesting and its potential worth

  • Not accounting for tax treatment or deferral

  • Failing to provide for ongoing cooperation to divide shares after divorce

Given the stakes involved, stock compensation should never be treated casually in divorce. A misstep could mean leaving tens or hundreds of thousands of dollars on the table.

Negotiating a Fair Division

In many cases, dividing stock options and RSUs becomes part of a larger settlement negotiation. Spouses may agree to:

  • Offset equity compensation with other assets (e.g., home equity, retirement accounts)

  • Defer division until shares vest, with clear formulas in place
  • Sell shares upon vesting and divide proceeds
  • Use a neutral third-party or financial professional to handle division post-divorce

In long-term marriages or when options are a key part of total compensation, this issue may dominate negotiations. Skilled legal strategy is essential to ensure you’re not undervaluing what could be your most significant marital asset.

Final Thoughts

Stock options and RSUs are valuable assets that deserve careful treatment in California divorce proceedings. Whether you’re the spouse who earned them or the one entitled to share in their value, understanding how these assets are characterized, valued, and divided can significantly impact your financial future.

California family law has clear—but complex—rules about how to divide deferred compensation. With proper legal representation and financial analysis, you can protect your rights, avoid unnecessary disputes, and reach a resolution that reflects the true value of what was earned during the marriage.

At Minella Law Group, we specialize in high-net-worth divorce and have extensive experience dividing stock options and RSUs. We work with financial experts, forensic accountants, and QDRO professionals to ensure our clients receive the full value they are entitled to.

 

Need Help Dividing Stock Options or RSUs in Divorce?

📞 Call Minella Law Group today at 619-289-7948 to schedule a confidential consultation with one of our family law specialists. We’ll listen to your concerns, assess the situation, and create a clear strategy tailored to your goals.

📝 Prefer email? Fill out our online contact form and a member of our legal team will get in touch with you promptly.

In Military Divorce

Understanding Military Divorce

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Military divorce is usually considered to be significantly different from a non-military divorce. In order for any court to assert its jurisdiction over a military divorce, the Petitioner will have to serve the active member with a petition for the dissolution, as well as a valid summons. Because of this, if the service member in question is currently deployed overseas, the process of completing a military divorce can be somewhat challenging.

These differences generally make themselves known in the process of obtaining personal service, complying with rules and regulations set by the military, and dividing a military pension.  Military divorce has special procedures that need to be followed especially if the member is active duty.

The Military and Divorce

Divorce is not a simple process for anybody. Military divorce can be especially taxing within California because of the requirements the state imposes on service members that are deployed, living overseas or currently existing outside of the California jurisdiction.  Parties who are considering divorce with an active duty military member will often benefit from learning more about the path that is ahead of them before they start this trying process.

If you are the Petitioner in the case and your spouse is a service member who has been deployed overseas, completing service becomes extremely difficult.  The Servicemembers Civil Relief Act (SCRA) will be a factor in your case.  SCRA will postpone or suspend certain legal matters that are pending in court while the servicemember is located.

The law states service members cannot be held responsible for not replying to a divorce petition when they are deployed, but it does not allow the military spouse to neglect the papers. If the service member fails to respond to the divorce, then the court may choose to appoint a reserve, civilian natural or active duty person as an officer of the court to serve the papers on their behalf.

The SCRA will appoint an attorney to located the military member and report to the court on his location and ability to participate in a divorce. During that time, there will be a stay in the case meaning the court cannot make any orders for support or division of assets.  If you are in need of support and your spouse is not paying, you should immediately contact their command to enforce military regulations for family support.  The court cannot make any orders while the stay is in place.

Federal Laws Regarding Military Divorce

Recently, federal laws and regulations have undergone some changes that should make personal service much simpler for military couples with children when the spouse is stationed overseas. Regardless of the location of the spouse in active duty, uniformed service members and federal agencies will be required to take on the responsibility of facilitating the legal process.

Military assets, including military pension of the service member, are valuable, and can be divided between spouses much like the standard assets within a regular divorce case. However, it is necessary for both spouses within a military divorce to understand how the court deals with dividing military pensions.  Not all service members will be entitled to a pension, it does depend on the years of service.  If there is a pension, it will be divided by the time rule which looks at the length of service while married.  The portion that was acquired during marriage wil be split 50/50.

There other assets that are only issues in military divorce that need to be give special care. There is the Survivor Benefit Plan (SBP) election that needs to be discussed.  SBP needs to be ordered in order to be received and there are different levels of election, not all the elections will be covered by support payments.  There is also the Servicemembers Group Life Insurance (SGLI) that needs to be divide.

There are assets that need to be divided in military divorces that are not present in a non-military divorce.  It is important to understand what you are entitled to and what needs to be included in your divorce judgment.

Division of Military Pay and Pensions

Community Property Rules Apply

California is a community property state, meaning all income earned and assets acquired during the marriage are generally split 50/50.

That includes military pay and pensions, but federal law affects how those are divided.

Uniformed Services Former Spouses’ Protection Act (USFSPA)

This federal law allows state courts to treat military retirement pay as marital property and divide it in divorce — but it sets specific rules:

  • The “10/10 Rule”: For the Defense Finance and Accounting Service (DFAS) to pay a former spouse directly, the marriage must have lasted at least 10 years, and those years must overlap with 10 years of military service.

  • Even if the 10/10 rule isn’t met, the California court can still divide the retirement — the payments just come from the service member directly, not DFAS.

Disability Pay Exception

VA disability benefits cannot be divided as community property, but they may affect the calculation of spousal or child support, since they count as income.

Residency Requirements

In order for the court to have the ability to properly divide a military pension, the court must have the military spouse’s legal consent, or legal residence within a state. A spouse simply being stationed within a state for a temporary period of time does not constitute residency.  If the military member has maintained residency in a different state, California may not have jurisdiction to divide the military member’s pension.  Consent of the spouse does not have to be verbally expressed, as long as the court has proper jurisdiction it has the ability to divide military retirement, regardless of the overall length of the marriage.

Service Member Civil Relief Act (SCRA) Protections

The Service Member Civil Relief Act (SCRA) is a federal law that protects active-duty service members from being disadvantaged in civil court proceedings while serving.

In divorce cases, this means:

  • The court can delay (stay) proceedings if military duties prevent participation.

  • A default judgment cannot be entered against a deployed or unavailable service member without ensuring they’ve had a fair chance to respond.

  • The service member may request a postponement of the case while on active duty or shortly thereafter.

These protections ensure fairness but can also make the process take longer than a civilian divorce.

Military Benefits for Former Spouses

Depending on the length of the marriage and overlap with service, former spouses may qualify for certain ongoing benefits:

Benefit Requirement Details
Full TRICARE & base privileges “20/20/20” rule: 20 years of marriage, 20 years of service, and 20 years overlap Full military benefits continue until remarriage
Limited TRICARE (1 year) “20/20/15” rule: 20 years marriage, 20 years service, 15 years overlap Transitional coverage for one year post-divorce
Commissary/Exchange Access Same as 20/20/20 rule Retains privileges if criteria met

If the marriage doesn’t meet these thresholds, the non-military spouse typically loses these benefits upon divorce.

 

••Minella Law Group Can Help••

A military divorce in California involves unique legal layers that go beyond standard family law. Understanding how state and federal laws interact — especially regarding jurisdiction, pensions, benefits, and deployment — helps both spouses protect their rights and plan their futures with clarity. We regularly represent service members and military spouses in San Diego and across California, ensuring fair, informed outcomes that respect both the service and the family.

📞 Call Minella Law Group today at 619-289-7948 to schedule a confidential consultation with one of our family law specialists. We’ll listen to your concerns, assess the situation, and create a clear strategy tailored to your goals.

📝 Prefer email? Fill out our online contact form and a member of our legal team will get in touch with you promptly. 

Frequently Asked Questions About Military Divorce

Does military divorce follow different laws than civilian divorce in California?

Yes — both state and federal laws apply.

A military divorce is still a California divorce, but several unique federal statutes interact with state family law, making the process more complex.

Key differences include:

  • SCRA (Servicemembers Civil Relief Act): Allows active-duty military members to pause or delay divorce proceedings if deployment or duty prevents participation.

  • USFSPA (Uniformed Services Former Spouses’ Protection Act): Governs how military retirement pay is divided in divorce.

  • Jurisdiction rules: You can often file in California even if you’re stationed elsewhere, depending on residency and military orders.

  • Service of process: Special rules apply if a service member is deployed or stationed overseas.

The result: Military divorce looks similar to civilian divorce, but it has additional layers that require a military-savvy family law attorney to navigate properly.

How are military pensions and benefits divided in a divorce?

This is the #1 financial concern for military families.

Here’s how it works in California:

Military retirement is community property

Any portion of military retirement earned during the marriage is subject to division under California’s 50/50 community property rules.

The 10/10 Rule

A common misconception:
➡️ The “10/10 rule” does not determine whether a spouse gets part of the pension.

It only affects how the pension is paid.

  • If the couple was married at least 10 years, overlapping with 10 years of military service, DFAS will pay the former spouse directly.

  • If not, the service member must pay the marital share directly to the ex-spouse.

Disability pay cannot be divided

VA disability benefits are not divisible as community property, but they can be counted as income for:

  • Child support

  • Spousal support

Other benefits with special rules:

  • TRICARE, commissary, and base privileges depend on the 20/20/20 or 20/20/15 rules.

  • SBP (Survivor Benefit Plan) elections must be made during the divorce to protect the former spouse’s pension share.

Because of these overlapping state and federal laws, military pension division is one of the most technical parts of a military divorce.

How does deployment or PCS relocation affect child custody?

California law protects military parents — deployment alone cannot be used against you in custody decisions.

Under California Family Code §3047:

  • A parent’s absence due to deployment, mobilization, or PCS orders cannot be considered abandonment.

  • Any temporary custody change made because of military duty must be reversed when the parent returns, unless doing so would harm the child.

  • Courts encourage:

    • Virtual visitation (video calls, messaging apps)

    • Delegation of visitation to grandparents or close relatives

    • Detailed long-distance parenting plans

When the military parent is the custodial parent:

  • They may need to request temporary orders allowing the child to stay with a designated caregiver during deployment.

When PCS orders require relocation:

  • The move triggers a relocation (move-away) analysis, but courts recognize that PCS orders are mandatory, not voluntary.

In Child Support, Estate Planning

Special Needs Trusts & Child Support for Children with Disabilities in San Diego

stack of papers

Safeguarding Your Child’s Future After Divorce

Parenting a child with disabilities brings immeasurable love—and significant responsibility. When divorce enters the picture, California parents face an added layer of complexity: ensuring that child support provides meaningful care without compromising eligibility for public benefits.

This legal tightrope is especially critical in San Diego, where families rely on programs like SSI, Medi-Cal, IHSS, and regional center services to help cover care and support. Many parents are shocked to discover that a traditional child support order—while well-intentioned—can disqualify their child from these life-sustaining benefits.

The solution lies in creating a court-approved Special Needs Trust (SNT) that works in tandem with your child support obligations. At Minella Law Group, we guide families through this exact process—ensuring your divorce plan protects your child’s long-term financial stability and legal rights.

Divorce, Disability, and Financial Protection in California

When a child has a significant disability, public programs often become a financial lifeline. These programs, however, have strict means-based eligibility requirements, meaning even modest increases in income or assets can render your child ineligible.

For example:

  • SSI (Supplemental Security Income) is reduced dollar-for-dollar based on income.

  • Medi-Cal imposes income and asset limits that can be unintentionally breached.

  • Regional center and IHSS services may be tied to SSI or Medi-Cal eligibility.

Now add child support: a regular monthly payment from one parent intended to help with daily needs. Seems helpful, right?

Not always. Direct child support payments count as unearned income in the eyes of the Social Security Administration (SSA). If those payments exceed a minimal threshold, they can immediately cut off eligibility for SSI—and, by extension, Medi-Cal and related services.

The Hidden Risk: When Child Support Undermines Public Benefits

Without legal planning, child support payments that are meant to help your child can inadvertently become a legal and financial hazard. Here’s how:

  • Direct child support payments (to the custodial parent or the child) are treated as income to the child under federal law.

  • If the child is over 18 and receiving SSI, those payments can reduce or eliminate monthly benefits.

  • Once SSI is lost, Medi-Cal coverage may disappear as well, leaving parents responsible for expensive medical care or therapies.

This legal loophole blindsides many families during divorce—especially those who are unaware of how support orders interact with disability law.

Fortunately, California law allows a solution: structuring the child support payment so that it goes directly into a Special Needs Trust.

Understanding the Role of a Special Needs Trust (SNT)

A Special Needs Trust (SNT) is a legally recognized tool that allows parents, relatives, or courts to set aside funds for a child with disabilities without jeopardizing that child’s eligibility for public benefits.

Key Characteristics of an SNT:

  • The trust is not owned by the child, and therefore does not count toward asset or income limits for SSI or Medi-Cal.

  • Funds can be used to supplement public benefits (not replace them), improving quality of life without triggering disqualification.

  • An appointed trustee—a parent, professional, or third party—manages distributions to ensure compliance with federal and state rules.

  • Courts can order child support payments to flow directly into the trust, protecting benefits while ensuring support is provided.

In divorce cases, this type of trust becomes the bridge between fulfilling child support obligations and preserving access to critical services.

How to Direct Child Support to a Special Needs Trust

California courts recognize the importance of preserving public benefits for children with disabilities. As a result, they allow and encourage the payment of child support directly into a court-approved SNT—but only if the correct procedures are followed.

Here’s how it works:

  1. Establish a First-Party SNT
    A first-party Special Needs Trust is created using the child’s assets or income—here, that means child support. The trust must:

    • Be irrevocable
    • Name the child as the sole beneficiary
    • Be established before the child turns 65
    • Include a Medi-Cal payback provision (required under federal law)
  2. Request Court Approval in the Divorce Judgment
    The divorce decree must:

    • State the obligation to pay child support
    • Specify that the support will be paid directly to the SNT
    • Be accompanied by judicial approval of the trust documents
  3. Set Up Trust Management and Oversight
    Appoint a trustee familiar with SNT compliance—this can be a family member, professional fiduciary, or corporate trustee. Their role is critical in ensuring proper spending and annual reporting.
  4. Notify Public Agencies
    Social Security, Medi-Cal, and regional centers must be notified of the trust and support order structure. Legal coordination ensures seamless benefit continuation.

At Minella Law Group, we draft compliant trust language, structure the child support order, and obtain court approval—all while guiding you through communication with relevant agencies.

Key Benefits of Using a Special Needs Trust in Divorce

The benefits of directing child support into a Special Needs Trust go far beyond legal compliance:

✅ Preserves Public Benefits

An SNT keeps your child eligible for SSI, Medi-Cal, and IHSS—programs that provide financial support, in-home care, therapies, and more.

✅ Covers Supplemental Expenses

The trust can pay for things public benefits don’t: therapy, equipment, camp, travel, technology, tutoring, and personal care items.

✅ Provides Oversight and Protection

A trustee ensures funds are used appropriately and in the child’s best interest, reducing the risk of financial exploitation or mismanagement.

✅ Creates Long-Term Security

An SNT can accept other contributions—gifts, inheritances, lawsuit settlements—making it a powerful estate planning tool beyond child support.

✅ Fulfills Legal Obligations

By routing child support to an SNT, you meet your financial responsibilities without harming your child’s benefit eligibility.

ABLE Accounts: A Supplementary Tool for Families

In addition to SNTs, California families may also consider an ABLE account (Achieving a Better Life Experience) as part of their planning.

What Is an ABLE Account?

An ABLE account is a tax-advantaged savings account for individuals with disabilities, established under federal law and available in California. It allows eligible individuals to save and spend money without losing SSI or Medi-Cal eligibility—up to certain limits.

Key Features:

  • The beneficiary can save up to $100,000 without affecting SSI
  • Contributions are made post-tax but grow tax-free
  • Funds can be used for qualified disability expenses, including housing, education, and health care
  • Anyone can contribute (including parents, relatives, or friends)

Comparing Special Needs Trusts vs. ABLE Accounts in Divorce

Both tools are powerful—but serve different functions:

Feature Special Needs Trust (SNT) ABLE Account
Max Contribution Unlimited $17,000/year (2025)
Benefit Impact Exempt from SSI/Medi-Cal limits Up to $100,000 exempt for SSI
Control Managed by trustee Controlled by beneficiary or representative
Can Receive Child Support? Yes Not ideal (may be treated as income)
Use in Divorce? Excellent for court-ordered support Supplementary tool only

📌 Conclusion: Use an SNT for court-ordered child support. Use an ABLE account as a supplemental savings tool for day-to-day independence.

Practical Steps for Divorcing Parents in San Diego

  1. Hire a Family Law Attorney Experienced in Disability Planning
    1. Not all divorce lawyers understand the complexities of disability-related child support. Work with one who does—like Minella Law Group.
  2. Establish a Court-Approved Special Needs Trust
    1. We will help draft, review, and obtain judicial approval for a compliant SNT to hold support funds.
  3. Incorporate the Trust into the Divorce Decree
    1. Your support order must reflect the new structure. We’ll draft exact language to satisfy court and agency requirements.
  4. Coordinate With SSA, Medi-Cal, and Other Agencies
    1. We handle communication to ensure benefits continue uninterrupted.
  5. Educate Family and Caregivers
    1. Anyone who may wish to gift or assist your child financially needs to understand that direct transfers could cause harm. All assistance should go through the trust.

Why Local Legal Experience Matters in San Diego

Disability and family law are state-specific—but implementation is local. In San Diego County, judges, regional centers, and Medi-Cal eligibility offices each have unique practices and expectations.

Our team at Minella Law Group:

  • Understands how local judges handle support orders involving disabled children

  • Knows how to work with San Diego County Health and Human Services

  • Maintains relationships with regional centers and probate court administrators

  • Has crafted SNT and child support structures for a wide range of families—from autism spectrum to complex medical needs

Having local counsel who speaks the language of both family law and disability law can make the difference between benefit protection and benefit loss.

The Bottom Line: Avoiding Pitfalls with Child Support and Disability

A standard child support order may unintentionally hurt the child it’s meant to protect. Without careful planning, your child could lose access to SSI, Medi-Cal, or IHSS—placing the burden of care and medical expenses back on your family.

With proper legal strategy—including a court-approved Special Needs Trust—you can protect your child’s public benefits while fulfilling your support obligations.

Protect Your Child’s Benefits and Financial Security

Divorcing with a disabled child means making hard decisions. Don’t make the mistake of overlooking how child support interacts with public benefits.

At Minella Law Group, we help San Diego families:

  • Draft and obtain court approval for Special Needs Trusts
  • Structure child support payments to preserve benefits
  • Coordinate with SSA and Medi-Cal
  • Advise on ABLE account use
  • Secure your child’s future with legal clarity and care

📞 Call Minella Law Group today at 619-289-7948 to schedule a confidential consultation with one of our family law specialists. We’ll listen to your concerns, assess the situation, and create a clear strategy tailored to your goals.

📝 Prefer email? Fill out our online contact form and a member of our legal team will get in touch with you promptly.

 

 

In Divorce

FAQ: Are There Ways To Reduce Alimony?

alimony

California family law courts order spousal support to ensure that the standard of living experienced during the marriage is maintained to a reasonable extent after the divorce. Regardless of what you may have heard, that doesn’t mean that spousal support is fixed for life. In fact, California law does not favor indefinite spousal support, or alimony. If you or your spouse were awarded spousal support in your divorce, it is possible to have that support reduced.

Ways to Reduce Spousal Support After Divorce

Unless the conditions under which spousal support can be reduced or terminated are specifically addressed in your divorce agreement or court order, the paying spouse can request the court to order a reduction. There are three main steps in determining whether you’re entitled to a reduction.

1. Analyze the Spousal Support Order. There are no shortcuts to winning a spousal support reduction, and it isn’t enough to ask the court for one because you think it’s called for. Make sure you fully understand what the original order calls for. Check what, if any, provisions for modification or non-modifiability are outlined in it.

2. Analyze Your Former Spouse’s Change of Circumstances. One of the top reasons for a reduction in spousal support is the changing circumstances of one or both parties. What does that mean? Simply put, it’s the reason you believe a reduction is justified. Common changes in circumstances include:

• The paying spouse’s income has decreased since the spousal support was ordered.

• The receiving spouse’s income has significantly increased since support was ordered.

• The receiving spouse is now living with another partner. Sharing a home with a roommate, no matter what gender, does not qualify.

3. Prove Your Claim Through Evidence. Once you understand your original spousal support order, and you’ve identified any changing circumstances, you’ll need to produce evidence to the court that backs up your request for reduction. This can be in the form of financial documents, written declarations, oral testimony, or a combination of all three.

What the Court Considers

The court contemplates several factors when deciding whether a reduction is justified. Illness, unemployment, and remarriage are all causes for consideration. So, too, are a party’s age and physical and emotional condition. Keep in mind that the courts do not look kindly on those who voluntarily leave a job or seek a lower paying one simply to avoid paying the ordered support.

A reduction in spousal support can often be more difficult and complicated than obtaining the original order. That’s because in post-judgment divorce orders, the family court has certain conditions for modification and must use a complex evaluation, not a computer program, for determining if a change is warranted

An experienced California family law attorney can help you evaluate your current order and advise whether a request for reduction is proper. If you’re facing a spousal support modification request and want to oppose it, an attorney can tell you whether the request for modification is justified and help you oppose it if necessary.

📞 Call Minella Law Group today at 619-289-7948 to schedule a confidential consultation with one of our family law specialists. We’ll listen to your concerns, assess the situation, and create a clear strategy tailored to your goals.

📝 Prefer email? Fill out our online contact form and a member of our legal team will get in touch with you promptly.

In Divorce

Protecting Your San Diego Business or Professional Practice During Divorce

divorce attorney san diego splitting assets | Minella Law

Divorce is never simple—but when you’re a business owner, licensed professional, or practice partner in San Diego, divorce becomes a financial and professional turning point. Your business isn’t just another asset—it’s your income, your legacy, and your future.

Whether you own a dental office, a law firm, a consulting company, or a family-run business, protecting your enterprise through a divorce requires precise legal planning and strategic negotiation. In this guide, we’ll explore how to value, protect, and, when necessary, divide business interests during a California divorce—with a focus on San Diego’s family law courts and professional landscape.

Divorce and the Business Owner’s Dilemma

In California, almost all property acquired during marriage is presumed to be community property, which means it must be divided equally in divorce—unless there’s a valid prenuptial or postnuptial agreement that says otherwise.

But dividing a business is far more complicated than selling a car or splitting a savings account. Business owners must contend with:

  • Valuation disputes

  • Cash flow implications

  • Tax consequences

  • Professional licensing considerations

  • The emotional toll of exposing business records and operations

For professionals like doctors, lawyers, and accountants, the stakes are even higher—since many practices are tied directly to their license, skillset, or reputation.

Business Valuation in California Divorce: Legal Foundations

To divide a business or professional practice fairly, the first step is understanding how much it’s worth. Under California Family Code § 2550, the court is required to divide community property equally unless the parties agree otherwise.

That means any increase in the business’s value during the marriage becomes subject to division, even if the company was started before marriage.

Business Valuation Factors Include:

  • Tangible assets: equipment, inventory, real estate

  • Intangible assets: brand, goodwill, IP

  • Gross and net revenue

  • Debts and liabilities

  • Industry multipliers and market comps

  • Owner compensation and benefit structure

Valuation is typically conducted by a neutral forensic CPA or valuation expert, who will issue a report and testify if necessary.

The Role of Professional Goodwill in Divorce Valuation

For licensed professionals—doctors, attorneys, therapists, and more—the most significant (and often most contested) element of business valuation is goodwill.

Two Types of Goodwill in California Divorce:

  1. Personal Goodwill

    • Tied to the individual’s personal skills, relationships, and reputation

    • Often not transferable or divisible

  2. Enterprise Goodwill

    • Tied to the business as a functioning, transferable operation

    • Generally considered community property

In Marriage of Foster (1974), California courts established that professional goodwill is a community asset when built during the marriage—even if the practice itself is a sole proprietorship.

The challenge lies in separating goodwill from earned income, projecting future profitability, and assigning fair value in a way both spouses (and the court) can accept.

Using Prenups and Postnups to Safeguard Business Interests

One of the strongest tools for protecting a business in divorce is a well-drafted prenuptial or postnuptial agreement. These agreements can:

  • Designate the business as separate property

  • Define how any growth or appreciation will be handled

  • Set terms for spousal buyouts or co-ownership

  • Clarify expectations around salary, compensation, and profit distributions

California courts generally uphold these agreements—so long as they are voluntarily signed, properly executed, and not unconscionable at the time of enforcement.

If you’re not yet married or are considering a postnup, consult with a family law attorney familiar with business and contract law.

Avoiding Commingling: How Financial Practices Affect Division

Even if your business predates your marriage, how you handle its finances during the relationship can dramatically affect your divorce outcome.

Tips for Preserving Separate Property Status:

  • Avoid using marital funds to pay business expenses

  • Keep personal and business accounts separate

  • Maintain clean, consistent books

  • Pay yourself a reasonable salary (instead of reinvesting all profits)

  • Limit or document your spouse’s involvement

The more you can show that your business operated independently from your marital finances, the stronger your case that some or all of it should be considered separate property.

Key Strategies to Retain Control of Your Practice Post-Divorce

Losing control of your business during divorce is rarely in either party’s best interest. Fortunately, California courts typically favor awarding the practice to the primary operating spouse, especially when it’s a sole proprietorship or professional entity.

Strategies to Retain Ownership:

  • Offer a buyout of your spouse’s community interest

  • Offset value using other assets (retirement, home equity, cash)

  • Negotiate a structured settlement over time

  • Use your operating agreement (LLC/partnership) to restrict transfers

  • Propose mediation or collaborative divorce to preserve confidentiality

Structuring Buyouts and Creative Settlements

When a buyout is on the table, the key is fairness, liquidity, and tax efficiency.

Buyout Options:

  • Lump sum payment (from cash or other assets)

  • Installment payments over time, often with interest

  • Offsetting assets like real estate or retirement accounts

  • Delayed payout tied to future business performance (with clear terms)

All agreements should be reviewed for tax implications, especially where capital gains, depreciation, or phantom income may arise.

Dividing Business Assets: Court Outcomes vs. Negotiated Agreements

When spouses can’t agree, the court will intervene—and while judges in San Diego are experienced, you may not like their solution.

Three Common Approaches:

  1. Award to one spouse with buyout
    Most common, especially for professionals or sole owners.

  2. Sale and division of proceeds
    Rare, and usually reserved for co-owned businesses or when neither party can sustain operations.

  3. Deferred sale or co-ownership
    Highly unusual, and only workable when both spouses are civil, involved, and mutually invested in the company.

Avoiding court gives you far more flexibility—and protects your privacy.

Special Considerations for Licensed Professionals

For doctors, lawyers, CPAs, and other licensed professionals, business division isn’t just about dollars—it’s about your right to practice and control your reputation.

Considerations Include:

  • Is the business transferable without your license?

  • Will a valuation of goodwill hinder your ability to earn post-divorce?

  • How can you structure a settlement that doesn’t drain your working capital?

California law prohibits a non-licensed spouse from owning part of a professional practice, so courts often award the practice to the professional and require a cash equalization.

Valuation Disputes: How to Use Experts to Protect Your Position

Valuation is often the most contentious element in business divorces. If your spouse believes the business is worth more than you do, expect a battle.

Combat Tactics:

  • Hire your own forensic CPA or business appraiser

  • Challenge unrealistic assumptions in your spouse’s expert report

  • Present documentation showing trends, liabilities, and industry norms

  • Argue against double-dipping (income used in both support and valuation)

At Minella Law Group, we work with top-tier valuation professionals and help shape the narrative of your business value with persuasive evidence and strategy.

Why Local Experience Matters in San Diego Business Divorces

San Diego has a unique business climate. From biotech startups to real estate brokers, private medical practices to legal firms, the complexity of business valuation and division in this market demands local legal knowledge.

We know the judges. We know the evaluators. We know how San Diego family courts treat everything from goodwill to stock options to joint ventures.

And that insight is what sets us apart.

Minella Law Group Protects What You’ve Built

You’ve worked hard to build your business or professional practice. Don’t let divorce unravel your future. Whether you need help navigating valuation, negotiating a buyout, protecting separate assets, or ensuring your spouse doesn’t walk away with more than their fair share, Minella Law Group can help.

📞 Call Minella Law Group today at 619-289-7948 to schedule a confidential consultation with one of our family law specialists. We’ll listen to your concerns, assess the situation, and create a clear strategy tailored to your goals.

📝 Prefer email? Fill out our online contact form and a member of our legal team will get in touch with you promptly.