What is Family Code 2640

Family Code section 2640 provides that in the event of a Family Law Action, contributions from separate property to the acquisition or improvement of community property, or the other party’s separate property, will be reimbursed to the contributing party without interest or adjustment for change in value.   

Reimbursement and Divorce

Did you contribute money that you earned prior to marriage to property that was acquired during marriage? If so you could be entitled to reimbursement. 

Reimbursable separate property contributions to community property are defined in Fam C §2640(a).

If you make downpayments, payments for improvements, and payments that reduce the principal of a loan used to finance the purchase or improvement of the property, you could be entitled to reimbursement at divorce.

Please note that Fam C §2640(a) does not include payments of interest on the loan or payments made for maintenance, insurance, or taxation of the property.

A party who makes such contributions to the community will be reimbursed if the contributions are traced to a separate property source, unless he or she has waived the right to reimbursement in writing or has signed a writing that has the effect of a waiver. Fam C §2640(b). 

If you have a reimbursement issue If you are drafting a premarital agreement and have questions,  you can contact me at Amanda@gordonfamilylaw.com for more information.

What is an RSU?

An RSU is a restricted stock unit. The only difference between RSU and restricted stock is that an RSU is an unfunded promise. This amounts to an entry on the books at the corporate level. The only distinction between traditional restricted stock and an RSU is that you cannot make a Section 83 b election – the election for the employee to opt out of the standard IRS treatment with an RSU. Instead, you are typically taxed when the substantial risk of forfeiture goes away. 

There two key questions when evaluating the value of an RSU (1) when the does the earning period begin and (2) when does the earning period end.

I don’t know what types of equity compensation my wife has at her start-up, what documents should I ask for in a divorce?

The document that you are looking for in order to determine what type of stock award your spouse has been given is called an Equity Compensation Plan Document. At the company level this is a document that applies to all employees. You will also want something called a Grant Notice, which describes the specific provisions of each grant given to the employee.

Last, you will want to ask for an Account Statement, which is a snap shot of where the employees accounts are today.

You can contact me at Amanda@gordonfamilylaw.com for more information.. 

What date is used to value my assets?

The Court is obligated to value assets as of the date of trial.  Family Code 2552. However, if there is good cause, the parties can request that the Court value the assets at a date following separation but prior to the trial.  Family Code 2250(b).

A good example of when this is appropriate is if you have small business or if there has been a significant period of time between the date of separation and the date of trial.

If you are concerned about the valuation of your assets, you should consider working with a family law attorney to determine what is the best valuation date. Contact me at amanda@gordonfamilylaw.com for more information.