Our Orange County Property Division Lawyers Help You Protect Your Possessions

In California, all community property assets are subject to equal division during the divorce process. It does not matter what you own or how much it is worth, if it qualifies as a “community property” and it is not protected by a legally-enforceable prenuptial agreement, it is going to be on the table in your divorce, and you are going to need to engage an Orange County  divorce law firm to ensure that it is handled appropriately.

Although they are treated similarly to other forms of property, luxury assets present some unique considerations during the divorce process. Whether an asset is of extraordinary value (or essentially priceless) or you have a personal connection to something that you have acquired as a result of your wealth, protecting it during your divorce will be important. Our Orange County divorce lawyers have extensive experience representing high-net-worth spouses, and we can use our experience to help you protect the assets you want to preserve once your marriage is over.

Applying California’s Community Property Law to Luxury Assets

Despite its progressive nature, California is one of the limited number of states that has not yet transitioned to the law of equitable distribution. California is still a “community property” state, and this means that spouses are required to divide their marital assets equally when they get divorced.

As a practical matter, most high-net-worth divorcing couples split their marital estate by working out an arrangement under which each spouse keeps an equal portion of the couple’s existing assets. This includes apportioning ownership of luxury items such as:

• Artwork
• Boats
• Cars, SUVs and motorcycles
• Collectors’ items
• Jewelry
• Private jets
• Vacation homes

In many cases, emotional attachment will play a significant role in determining which spouse keeps individual luxury items. For example, one spouse may have a deep emotional attachment to one of the couple’s vacation properties, while the other may place significant value on keeping a vintage car collection. When this is the case, the spouses can usually distribute their assets in a way that is mutually agreeable—although this does not necessarily mean that the process will go smoothly. Questions of valuation and other issues can lead to disagreements that take time, effort and court intervention to resolve; and, with so much at stake, both spouses will have a vested interest in doing what is necessary to ensure a just outcome.

Splitting the Sales Proceeds

Occasionally, high-net-worth spouses may decide to sell a luxury asset and split the proceeds as part of their divorce. This could be the case, for example, if a couple owns a yacht or vacation home that has sat virtually untouched for years. If spouses can agree to sell an asset, they can execute the sale as part of the divorce process (though they will need to agree on the sale price and terms as well), and then they can distribute the proceeds as part of their marital estate.

Turn to Seastrom Tuttle Murphy Dockstader to Protect Your Luxury Assets

If you have questions or concerns about protecting luxury assets during the divorce process in California, we encourage you to speak with one of our divorce attorneys. To schedule a confidential initial consultation at a time that is convenient for you, call us at 949-474-0800 or inquire online today.

Common Questions About Dividing Luxury Assets in an Orange County Divorce

How are art, jewelry, and collections valued in a divorce?

By qualified appraisal, and the choice of standard matters as much as the choice of appraiser. Insurance or replacement value is typically far higher than fair market value, and fair market value is what governs division. For art and collectibles the number also depends on the market being used, whether auction results net of commission or a dealer retail figure, and on condition, provenance, and documentation. Because two credentialed appraisers can differ widely on the same object, the specialty of the appraiser within the category, and whether the appraisal is defensible to a court rather than merely to a client, are the practical considerations.

Do luxury assets have to be sold and the proceeds split?

Not necessarily, and often they should not be. The requirement is an equal division of the net community estate, not liquidation of each asset. Items can be allocated between the spouses by agreement, or awarded to one spouse with an offsetting adjustment elsewhere. Forced sale is the fallback, and it usually destroys value, because collections sold under time pressure and in bulk realize less than they are worth on paper. Where the parties can divide in kind, or one spouse can buy out the other’s interest, the estate as a whole comes out ahead.

Who pays the cost of maintaining these assets during the case?

This deserves an early order rather than a later argument. Yachts, aircraft, horses, exotic cars, and second homes carry substantial insurance, storage, moorage, crew, hangar, boarding, and maintenance costs that continue whether or not either spouse is using the asset. Those expenses are ordinarily community obligations while the case is pending, but disputes arise where one spouse has exclusive use. Addressing use, cost allocation, insurance, and authority to sell in the first set of orders prevents the value from eroding while the case is litigated.

What if a luxury asset was purchased with separate or inherited money?

The character follows the source, and it has to be traced. An asset bought entirely with traceable separate funds remains separate property, though the tracing must be proved from records rather than asserted. Where separate funds contributed to an asset that is jointly titled, the contributing spouse is generally entitled to reimbursement of the contribution rather than to a share of its appreciation. Assets given between spouses during marriage raise a separate question, because a gift of substantial value that is not merely personal in nature is generally treated as community property absent a written agreement.

About the Firm

Seastrom Tuttle Murphy Dockstader is a family law firm in Irvine representing clients throughout Orange County, and in Los Angeles County. The firm practices family law exclusively. Its attorneys include Fellows of the American Academy of Matrimonial Lawyers and of the International Academy of Family Lawyers, and attorneys certified as specialists in family law by the State Bar of California Board of Legal Specialization. Call 949.474.0800 to discuss the division of luxury or collectible assets with the firm.