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Luxury Cars and Divorce: What Happens Now?

luxury cars divorce

For some people, their car is part of their identity. You may drive a high-end performance car, or perhaps you invested a lot of time and effort into personalizing your car. However, what happens when you are divorcing your spouse? Does this marital move impact your car ownership? This article will explore these questions and define what usually occurs to luxury cars caught amid divorce proceedings.

Divorce in California: Dividing Assets and Liabilities

In California, all assets and liabilities are community property. As such, they are divided equally at the time of dissolution. A divorce settlement requires some tabulations and calculations. The couple adds all their assets into one sum, and then they subtract any debts accrued during the marriage from that total estate value to arrive at their true net worth.

high net worth divorce CaliforniaIf the parties cannot agree on the division of assets or debts, a judge will divide the assets and debts after considering all the circumstances of the case.   If one person keeps a high-value asset, such as a luxury car or a house, the other party will need to receive assets of equal value. Whatever asset a party is awarded, they will typically also be assigned all the debt associated with that asset being responsible for those debts going forward. 

Luxury Cars in Divorce

In California, luxury cars receive the same treatment as any other property. If the couple purchased them together during the marriage, they are community property, and they need to be part of an equal division. If you bought a luxury car with proceeds you can trace to an inheritance or a personal gift, and you have proof of that transaction, then a court could characterize the asset as your separate property. Merely having the car in your name will not make a difference in what is community property if the car was purchased during the marriage.

If the Court Decides It Is Community Property

Cars present a problematic situation when it comes to valuation. While most cars tend to lose value over time, some higher-end vehicles might gain value. For example, the Ford GT may retail for half a million dollars, but it could eventually be worth three times the sticker price due to exclusivity. However, most luxury vehicles lose as much as 20 percent of their value after initially driving them off the lot. Therefore, if the court determines that your car is community property, you need to have it valued, possibly appraised. The valuation of the vehicle should take place around the time of the trial to ensure the price is fair.

luxury cars divorce CaliforniaIf you made a substantial down payment before the marriage and then continued making monthly payments during the marriage with community funds, the car would likely be characterized as separate property being purchased prior to marriage, however, the payments made from community property during the marriage could be problematic and raise an arguable issue.   Reaching an amicable agreement might be the easiest route when it comes to such high-value assets. If you and your spouse can agree to a fair division of cars and put it in writing, then the court will honor your agreement.

Contact Yelman & Associates to Discuss Your Luxury Car and Divorce

Are you facing a divorce where your luxury car could be at stake? You need to hire an experienced and professional family law attorney to protect your prized possession. The attorneys at Yelman & Associates are knowledgeable in the field of high net worth divorce and can advise you on how to retain ownership of your luxury car. With over 75 years of collective experience, we can help you protect yourself, your children, your property, and your future. Call us today at 1-619-282-1107 to set up a complimentary telephone consultation.

Find more like this: California Divorce Law, Divorce Law

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