When spouses go through a divorce, they are required to divide their assets between them. Depending on the divorce, spouses may have a variety of valuable properties that are sometimes seen as luxury assets. This can include collector’s items, fine art, vacation homes, recreational vehicles, club memberships, and more. When dealing with these situations, it is important to determine the correct value of these assets before they are divided. Continue reading below to learn more and retain the services of an experienced New York divorce attorney for assistance.
What Are Luxury Assets?
During a divorce, one of the most contentious aspects of the process can be the division of assets, especially when the couple has a number of luxury items. Because New York adheres to the equitable distribution method of dividing assets, this means assets are not always divided evenly between the spouses, as the court will examine each spouse’s contributions to the marriage to determine a fair outcome. As such, valuing these assets is an integral aspect of this process, as courts rely on the economic value rather than sentimental attachment when dividing property.
Luxury assets are a common matter in high-net-worth divorces throughout Suffolk County, Nassau County, and the remainder of Long Island, making this a frequent issue that arises.
Common Types of Luxury Assets in a Divorce
- Fine art, antiques, and collectibles that have a fluctuating market value
- High-end vehicles, boats, and recreational vehicles
- Business interests and professional practices
- Jewelry, watches, and designer accessories
- Club memberships or transferable access rights
- Vacation homes and real estate investments
How Are Luxury Assets Valued in a New York Divorce Case?
In order to know the worth of an asset before dividing or selling it in a divorce case, the court must have objective and supportable evidence to show the value of the asset. This essentially requires the asset’s fair market value in order for a decision regarding the asset to be made. As such, the courts often rely on professionals to help determine the value of assets, rather than relying on estimates provided by the spouses.
In New York divorce proceedings, the court will not simply accept an appraisal at face value. The judge assigned to the case must examine the method used to value the property and whether or not that method is appropriate for the type of property involved. Courts can weigh a number of factors, like multiple expert opinions and real-world market value, during this process. Judicial oversight is critical, as small nuances can drastically impact the value of an asset and ultimately affect equitable distribution methods.
Who Determines the Value of Luxury Assets
- Certified appraisers with experience with the specific asset at hand
- Forensic accountants who can assist in determining the value of business interests and investments
- Art and collectible expert
- Real estate appraisers licensed to practice in New York
Fair Market Value vs. Sentimental Value
It’s critical to understand that the court, when determining how to divide assets in New York, will base its decision on the fair market value of the asset, rather than the initial cost of the asset or what it would cost to replace the item. This can often come as a surprise to spouses who assume an item is worth more due to their sentimental attachment.
What Does Fair Market Value Mean in Practice?
- Represents the price a willing buyer would pay a willing seller
- There is no pressure from either party to buy or sell the asset
- Is based on current market conditions, not past appreciation in value
How Are Undervalued or Hidden Assets Handled in a Divorce?
Luxury assets are more likely to be hidden than ordinary property. It’s important to understand that any attempt to hide an asset, such as transferring it out of your name or intentionally undervaluing the asset, is a serious matter that carries hefty penalties if uncovered.
Judges in New York are typically granted broad discretion to handle hidden or undervalued assets. In many instances, if the court uncovers this occurrence, it may award the other spouse a larger share of assets or impose fines and fees. In some cases, this can impact the credibility of one spouse or result in contempt charges, which can impact the outcome of future matters that will arise in the divorce. As such, transparency and accuracy are critical in high- value asset divorces.
Common Tactics Used to Conceal or Undervalue Assets in Divorce
- Transferring valuable assets to friends or families
- Intentionally delaying bonuses, commission, or business income
- Storing physical assets outside of the marital home
- Underreporting the value of an asset
Red Flags to Remain Alert To
- Sudden changes in spending and asset ownership
- Missing documentation or receipts for high-value assets
- Inconsistencies in financial disclosure
How Do New York Courts Divide Luxury Assets?
As mentioned, the courts in Long Island and across New York State adhere to the equitable distribution method of dividing marital assets among a couple. When a couple cannot agree on how to navigate this process, the court will intervene and consider a number of statutory factors and potential options to help determine the outcome. It is important to understand that these decisions generally do not follow a formula, but are rather based on the specifics of the case.
Common Methods of Dividing Luxury Assets in New York
- One spouse retains the asset, and the other spouse receives an asset of equal value
- The court may order the sale of the assets and divide the proceeds among the couple
- They may continue to share ownership of the asset with defined usage rights when practical
- Assets may be traded against other marital property
When Might Selling Assets Be the Best Option?
In some cases, it is easier to divide a luxury item by selling it and splitting the money between spouses. This is often the outcome in instances where retaining an asset would result in financial hardship or cause ongoing conflict between the couple.
- It may be too costly or impractical to keep certain assets as a single adult
- The asset’s sentimental value may be tied to the marriage
- Spouses may need the money to pay for their divorce or certain marital debts
Important Timing Considerations for Luxury Assets
It is imperative to understand that many luxury assets are volatile, resulting in fluctuating market value. As such, the court will determine the value of an asset based on the date that it was appraised rather than the date the courts order the division of the asset.
Why Timing Matters
- Market value fluctuations can impact real estate and collectibles
- Business interests may change as the market changes
- Courts can use different valuation dates depending on the unique circumstances
Contact Our Experienced Long Island Firm
At the Law Offices of Susan A. Kassel, P.C., our firm understands how complicated navigating a divorce can be, especially when you have multiple high-value marital assets to consider. As such, our firm is committed to helping you seek the best possible outcome during these overwhelming and emotional times. Contact us today to learn how we can represent you.
