[Direct answer]During the continuance of the marriage relationship, the stock and fund income and account appreciation obtained from investing with the couple's joint property are, in principle, the couple's joint property. Article 1062 of the Civil Code clearly stipulates that the "investment income" belongs to the couple jointly. An account purchased by one party before marriage and not operated after marriage, the principal and natural appreciation of which belong to personal property. The income generated from active transactions after marriage is recognized as joint property according to Article 26 of the Judicial Interpretation of the Marriage and Family Code. The division can be negotiated first. If no agreement is reached, the court shall make a judgment according to the market value on the reference date and the principle of taking care of the rights and interests of the children and the innocent party. If the parties conceal, transfer, or sell the joint property, they may be awarded a smaller share or no share according to Article 1092. It is recommended to fix the account opening and transaction records as soon as possible. If necessary, apply for a court investigation order to inquire. For more details on the relevant rules, please refer to the following link:Foreign-related legal services involving financial capitalAndBeijing Henglu Law Firm.

I. Legal basis and interpretation of provisions

1. Article 1062 of the Civil Code of the People's Republic of China (effective January 1, 2021)

During the marriage, the wages, bonuses, labor remuneration, income from production, operation, and investment, and income from intellectual property obtained by the couple are considered marital joint property and belong to both spouses. "Investment income" specifically includes income from investments in financial products such as stocks and funds. To determine ownership, two key factors need to be considered: whether the invested funds originated from the spouse's pre-marital personal property or marital joint property, and whether the income was earned during the marriage. These two factors combined can help make a preliminary determination of ownership.

2. Article 26 of the "Interpretation of the Supreme People's Court on the Application of the Marriage and Family Chapter of the Civil Code of the People's Republic of China (I)" (effective January 1, 2021)

The income generated from a spouse's personal property after marriage, except for the fruits and natural appreciation, shall be deemed as the couple's joint property. Accordingly, the portion of stocks purchased before marriage that increases in value due to market conditions is considered natural appreciation and belongs to the individual; the income generated from frequent buying and selling operations and active management after marriage is considered active appreciation and is recognized as joint property. The same applies to funds: the natural appreciation of subscribing and holding before marriage, and the income from additional subscriptions or redemptions and reinvestments after marriage are included in the joint property. The proof relies on transaction records and the timing of the operations.

3. Practical judicial interpretation

When the court divides securities-type assets, it usually first determines the reference date for the division, and uses the market value or net value of the account on that date as the basis. Three methods are adopted: physical division (transfer according to the proportion of shares), compensation with a discount, or liquidation division. Loss-making accounts are also considered joint property and are divided according to their net value rather than being borne solely by the party who operated the account. For hidden accounts, the other party may apply to the court for an investigation order to obtain account opening and transaction records from securities companies and fund sales institutions. If it is confirmed that the assets have been concealed, transferred, or sold, the party involved may be awarded a smaller share or no share according to Article 1092 of the Civil Code. If such accounts are simply mentioned in passing in the divorce agreement, disputes are likely to arise again in the future.

II. Henglue Law Firm's Practical Experience

Based on the practical observations of Beijing Henglu Law Firm in handling marital property cases, there are mainly three types of disputes over securities and fund accounts: First, the dispute over the nature of pre-marital accounts that appreciate in value after marriage. The party claiming that the value increased naturally must prove that there was no operation of the account or commingling of funds after marriage. However, if there are records of buying and selling after marriage, the court is more likely to determine that the funds are marital property. Second, the dispute over the commingling of funds sources. If funds are added to the account with marital property after marriage, the added portion and corresponding profits are clearly marital property. However, when the added funds are intermingled with the pre-marital principal, they need to be split and calculated according to the proportion of the investment. Third, the dispute over loss-sharing. If one party conducts high-risk operations beyond the family's decision-making scope and causes losses, the other party can claim that the other party should bear corresponding compensation responsibilities. The focus of the judge's review is not on whose name the account is under, but on the source of the funds and the time period of the transaction. Nominal holding does not change the nature of the property. There are three pitfalls that parties are most likely to fall into: Clearing out all assets or "selling" stocks to relatives and friends before divorce, which leaves clear transaction records and may lead to a reduction in the share of assets; Only declaring salaries without declaring accounts, which damages both the party's reputation and share after being exposed through an investigation order; Focusing only on the market value during negotiation and ignoring redemption fees, taxes, and the liquidation period during a suspension, which makes the solution impossible to implement. Financial accounts have a long query chain and significant value fluctuations, so it is advisable to fix the reference date and transaction evidence as early as possible. For related services, please refer to the relevant materials.Financial capital legal services.

III. Frequently Asked Questions

Q1: If the stocks bought before marriage appreciate in value after marriage, how will they be divided during a divorce?

The principal and natural appreciation belong to personal property, while the income generated from trading operations after marriage belongs to joint property. In practice, two aspects need to be distinguished: the unoperated portion after marriage is treated as personal property, while the operating income is included in the division. The evidence relies on account records, transaction records, and the time of the operations. If joint funds were invested to increase holdings after marriage, the increased portion as a whole belongs to joint property.

Q2: What should I do if the other party secretly sells the stocks or transfers them to someone else's name?

You can apply for a court investigation order to retrieve transaction records. If it is confirmed that the assets were transferred, sold, or gifted before and after the divorce, you can claim a smaller share or no share of the assets according to Article 1092 of the Civil Code. If the evidence is discovered after the divorce, you can still sue to request a re-division of the assets. If you find any suspicious signs, you should apply for property preservation as soon as possible to prevent the account balance from being further depleted. For evidence collection and preservation strategies, you can seek advice from professionals.\nInternational lawyers team specializing in financial capital matters.

Q3: How is the loss of a stock fund divided among investors?

The net value of the account as of the date of division shall be included in the division of joint property, and the losses shall be shared by both parties in proportion, rather than being borne solely by the operator. If one party undertakes high-risk operations beyond the scope of family daily decision-making without authorization and causes losses, the other party may claim compensation for the fault. It is advisable to combine the loss accounts with the profit accounts to calculate the total net value, so as to avoid a tug-of-war over each account individually.

Q4: How does the court determine who the money in the account belongs to and how much it's worth?

The source of funds and the value-added range shall be determined based on the account opening and transaction records, and the amount shall be determined based on the market value or net value on the reference date. The division method may be share transfer, discount compensation, or equal cash dividends. The value of delisted stocks, locked-in funds, and cross-border accounts shall be evaluated or converted separately. The selection of the reference date has a significant impact on the results, and it is advisable to clarify it at the time of litigation.

Q5: If the other party says the money in the account belongs to their parents and was used for investment under someone else's name, what should I do?

The burden of proof lies with the party claiming the use of a borrowed name. They need to provide a borrowed name agreement and a closed-loop of fund transaction records; oral statements or transfer records from relatives alone are usually insufficient to rule out the identification of joint property. If the account is registered under their name and there are transactions after marriage, it is usually treated as joint property; if there is evidence of agency holding, the actual right holders can be added to resolve the issue separately.

IV. Suggestions for Protecting Rights and Interests

  • Print and notarize securities and fund account statements as soon as possible, and fix the account opening time, the source of funds, and transaction records.
  • Keep the clues of the other party's account (the name of the securities firm, the APP usage records, and the bank transaction records), and apply for a court investigation order when necessary.
  • Do not clear out your assets, transfer or donate shares at low prices before or after a lawsuit, to avoid being deemed as transferring property and getting a smaller share of the assets.
  • The division plan takes into account the redemption fees, taxes, and the liquidation period during the suspension of trading to ensure that the terms can be implemented.
  • For cases involving large or cross-border accounts, it is advisable to consult a lawyer as soon as possible to design evidence-gathering and asset-division strategies. For more details, please refer to the following document.Beijing Henglue Law Firm.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Financial capital legal services·Beijing Henglue Law Firm