Moving out before you formalize a separation agreement with your spouse could jeopardize your financial portfolio and your rights to...
The legal guidelines behind divorce settlements involving rare and exotic car collections are a complex and often confusing issue. Are the cars family property? Is it excluded? Is it possible to lose your valuable property during negotiations with your spouse? While every divorce is unique, there are some common factors for you to consider. Keep reading to learn more about how high-value collections could impact your divorce settlement and why.
Whether your rare and exotic car collection is considered family or excluded property makes all the difference to your divorce settlement. If you amassed the vehicles during the marriage, particularly if you used marital funds to make the purchases, the collection would be considered family property and is subject to equal division guidelines, even if only one spouse is named on the title.
However, if you owned the collection before you took your vows, or the cars were an inheritance or gift, they would likely be considered excluded property. Although their increase in value over the course of the marriage could fall under the guidelines of divisible family property.
The value of each spouse’s assets (including your rare and exotic car collection) and debts is calculated both at the time of your marriage and when you separate to determine your increased net worth. However, the value of excluded property is always deducted from your net family property (NFP).
The spouse with the higher NFP must then make an equalizer payment to the spouse with the lower calculation. For example, if your NFP is five million dollars, and your spouse’s is one million, the equalizer payment would be two million. So, you both walk away with three million.
There are ways to legally protect your rare and exotic car collection from a divorce settlement. A pre-nuptial or post-nuptial agreement is a legally binding contract that specifies how assets, like your car collection, are to be divided in the event the marriage breaks down.
Keeping the assets separate would also protect valuables from division. Always avoid commingling proceeds from the sale or purchase of the cars and maintain excellent records of your collection. Keep note of dates purchased and fair market value as determined by an independent appraiser or other qualified expert.
Not every family law firm in Ontario understands the impact of rare and exotic car collections on your divorce settlement. The Riley Divorce & Family Law Firm has years of experience managing factors like these in divorce proceedings.
We are available 24 hours a day to answer our clients’ important questions, and we would do the same for you. Let us help you protect your vital assets while ensuring a fair settlement for both you and your former spouse. Reach out today.
The Riley Divorce & Family Law Firm
