Consider using a margin loan?

If you’re thinking about using a margin loan during marriage, especially to help buy a house or fund something for both spouses, there are a few family law issues to keep in mind. Margin loans let you borrow against your investment account without selling assets. It might feel like a clean way to use separate property to support your family, but California law may treat that money very differently than you expect.

California presumes that property acquired during marriage is community property. That includes assets bought with borrowed funds. If you take out a margin loan during marriage using your separate brokerage account as collateral, and use the money for something shared like a down payment, that loan—and the asset purchased—may be considered community property. Even if the collateral is clearly separate.

In the Marriage of Grinius case, the court focused on whether the lender relied on community income or joint financials. If so, the loan proceeds were treated as community. This means that using your separate account as collateral might still create a community debt, especially if both parties are involved in the purchase or the asset is titled jointly.

This gets more complicated when the repayment comes from a joint account, or when there’s no written agreement clarifying the character of the funds. The result can be that one spouse takes on risk by using separate collateral, only to lose any separate interest in the property down the line.

If you’re thinking about using a margin loan during marriage, talk with a family law attorney first. We can help document your intent, keep your records clean, and avoid outcomes that feel unfair later. The earlier you clarify, the more flexibility you have.