Dividing Luxury Assets in Divorce

When luxury assets are involved in high-net-worth divorces, unique challenges can arise. Assets such as luxury vehicles, rare watches, yachts, high-end jewelry, vintage wine collections, and exclusive real estate holdings require careful consideration not only because of their significant monetary value but also the emotions that may be tied to them. All of which can make the division process more complex. So, let’s discuss the considerations that must be paid when luxury assets are part of the portfolio to be divided in divorce.

Step 1: Determine Ownership

As with any asset, one of the first steps in a divorce is to establish whether an asset is considered marital or separate property. Assets acquired prior to the marriage are usually deemed to be separate property, while assets acquired during the marriage are considered marital. However, it’s common to see hybrid assets in a collection of luxury goods. For example, certain pieces of art in a collection may have been acquired before the marriage and are considered separate property, while other pieces were purchased with funds earned during the marriage and are considered marital. However, if marital assets were used to acquire or refurbish the pre-marital items, they too may be subject to division as part of the marital estate.

Step 2: Value the Luxury Assets

Once we know which luxury assets are considered marital property, the next step is to determine their true value. Assets such as art and wine collections, fine or antique jewelry, collectible automobiles, and other such luxury items require specialized appraisals from industry experts. The value of these items can fluctuate due to market trends, rarity, or conditions. Accurate valuations are key to making informed decisions in the divorce. Remember that what you paid for an item may not reflect its current value. We’ve seen divorces where significant sums were lost when the owner made the incorrect assumption that an asset for which they paid handsomely and continued to cherish had retained its value and did not require an appraisal. It was only after the divorce that they learned the items had dropped precipitously in value,

 Divide the Assets

We often see that spouses will have different emotional attachments to their luxury assets. One spouse may feel strongly about retaining the collectible cars, while the other is more focused on the art or jewelry. Because these high-value assets may not be evenly valued, the couple will need to find other assets to equalize the division. For example, the parties may agree to equalize the division by unevenly dividing the investment account or real estate assets. However, you need to keep in mind that when different asset classes are being exchanged, tax considerations must be taken into consideration. It’s for this reason that utilizing the specialized services of a CPA or Certified Divorce Financial Analyst is essential at this stage of the divorce process.

Thoughtful Planning for the Future You Want

Divorce is not just about dividing property, it is about providing each party with the ability to have the lifestyle they imagine for themselves once the marriage is over. The choices made during this process will not only shape your financial future but your personal well-being as well.

At Vacca Family Law Group, we understand the intricacies of high-net-worth divorces and help clients make informed, strategic decisions. Our approach focuses on reducing conflict, maintaining privacy, and finding solutions that align with your financial and personal objectives. We believe divorce should be a process that allows you to move forward with confidence. Contact us today for a free introductory call and take the first step toward a well-planned resolution.

Vacca Family Law Group is located at One Grand Central Place, 60 E. 42nd St., Suite 700, New York, NY 10165.