Divide and Conquer: California Law on Reality TV’s Big Potential Divorce
Reality star Kyle Richards and luxury real estate mogul Mauricio Umansky have been married for a long time, though they have been legally separated for quite some time now. The reason this potential break-up has garnered so much interest (apart from the celebrity nature of the case) is that Ms. Richard’s TV earnings are not the only thing on the line – Mr. Umansky holds a prominent ownership position as a founder and CEO of real estate brokerage “The Agency.” The brokerage is reportedly valued at 57 billion dollars.
While divorce has not been filed for at the time this article is written, there is understandable interest and speculation on how California’s legal system would handle such a high-visibility, high-net-worth divorce.
This is especially true, as reportedly, no prenuptial or postnuptial agreement is in place.
Prenuptial Agreements
California law has established strict rules surrounding how marital assets, particularly business interests, are divided in cases of divorce. However, community property rules can be superseded (and often are) by the terms in prenuptial and postnuptial agreements. Ms. Richards has reportedly stated that there is no prenuptial agreement, as the couple did not have money when they wed and built their wealth together.
This is the exact scenario in which community property division, then, would be in play.
Community Property 101
As a community property state, California law sets strict rules around how marital assets—especially business interests—are identified, valued, and divided in divorce.
Under California Family Code §760, all property acquired by a married couple during the course of the marriage is presumed to be community property. This means that both spouses are recognized as equal owners, regardless of who actually earned the asset.
If what has been reported thus far is correct, then Mr. Umansky’s stake in The Agency was built during the course of the couple’s marriage. Therefore, under California law, the business interest in The Agency equally conveys upon Ms. Richards.
The law is built this way in order to recognize that sometimes partners contribute in less visible ways. In Ms. Richards and Mr. Umansky’s case, potentially Ms. Richards’ Hollywood connections and Hollywood leverage gave The Agency access to wealthy clients that set up a base and put the company on its trajectory to success.
Business Valuation
Courts typically require the assistance of forensic accountants or neutral business valuation experts when called upon to divide business interests in a high-net-worth divorce. These experts will consider:
- The date of separation (to distinguish post-separation earnings)
- The business’s fair market value
- Goodwill
- Contributions of each spouse
Business valuation and the resultant questions surrounding what constitutes a fair division are often one of the key issues in high-net-worth divorces in California. Do not leave your legacy to chance – legal professionals can help.
Contact The Law Office of Bradley S. Sandler
Even with a prenup, business valuations and spousal claims can become quite contentious in divorce proceedings. Contact an experienced high net worth divorce attorney at the Law Office of Bradley S. Sandler if you have questions about prenuptial agreements, postnuptial agreements, or your own high net worth divorce.
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