When it comes time to divide assets after a divorce, many spouses choose real estate, business interests, savings, and personal property as the primary indicators of their shared wealth.
But, several additional expensive items accumulate throughout a marriage and must be accounted for.
Given our vast experience counseling high-net-worth and celebrity couples in divorce and marriage agreements (pre-nuptial and post-nuptial), we can declare unequivocally that all partnerships may benefit from meticulously recording the marital estate’s assets, particularly those held in unusual ways.
Recent coverage of certain celebrity divorces has shed light on how to approach an equitable (or at least agreed-upon) allocation of assets that isn’t always foremost, providing an informative road map that any spouses may use.
These are some unusual assets that may need to be part of a divorce settlement.
Diamond rings and expensive items
Throughout the course of a marriage, couples amass several presents, which, in the case of A-list celebrities, might be worth a large amount.
Preparing early for such gifts might save time and pain in the future.
Consider Kim Kardashian and Kanye West as an illustration.
According to reports, the couple accounted for the allocation of all marital assets in their prenuptial agreement, which helped prevent extra tension during their very public divorce.
Many people’s first thought for a wedding present is the precious engagement ring, which is not only financially significant but also symbolically significant, since many are family heirlooms.
In January 2023, NBA star Ben Simmons filed a court notice to his ex-girlfriend and Love Island personality May Jama, requesting she return the $1.4 million engagement ring he purchased for her.
Who then receives the ring?
Since Mr. Simmons’ engagement ended and they didn’t get married, he was entitled to get the ring back. However, if his ex-girlfriend had said she thought of it as a “gift” that had nothing to do with marriage, he may have had legal problems.
It is so essential to ensure that your participation is explicit.
According to New York state law, the ring would have belonged to Ms. Jama if the pair had been married, since it would have become her distinct property.
Couples may also need to examine the division of assets, including artwork, wedding and anniversary gifts, and collections of sentimental value accumulated throughout the marriage.
At the time of their divorce, Angelina Jolie and Brad Pitt possessed a $25 million art collection, which became a major source of contention in the division of their assets.In 2021, it was said that the couple got rid of the temporary restraining order that had been put on their assets when they broke up five years earlier. This let Ms. Jolie sell a rare Winston Churchill painting that Pitt had given her.
In 2022, renowned New York real estate developer Harry Macklowe and his ex-wife Linda Burg were ordered by the New York State Supreme Court in Macklowe v. Macklowe 2020 NY Slip Op 01695 to sell and divide the proceeds from 65 pieces of their art collection. During their contentious divorce, their respective appraisers had provided significantly different valuations.
This action was historic for the art world, as it resulted in the greatest recorded art auction sale to date, valued at $922,2 million, and brought to a close the years-long, highly publicized legal procedures.
IP and Additional Intangibles
It is quite typical for spouses to neglect the intangible assets that comprise their marital estate, especially intellectual property.
This can include film, literature, or music, as well as later royalties, brand licensing, and several other income-generating activities.
When her divorce judgment identified her as the sole owner of her entire music collection and other intellectual property, including royalties, rapper MC Lyte deftly sidestepped this problem.
However, not every marriage reaches such an agreeable agreement.
In In re Marriage of Worth, 195 Cal.App.3d 768, the court concluded that “the principles of community property law do not require joint or qualitatively equivalent spousal activities or contributions in acquiring the property.”
This implies that copyrights established during a marriage, or those established before the marriage that begin making a profit during the marriage, are considered common property, even though neither partner contributed to them.
(Ultimately, Ms. Worth was generously paid when the trivial pursuit intellectual property was partitioned in accordance with this precedent.)
When joint intellectual property, such as a shared song or TV credit, is involved, it can be much more difficult to reach a settlement about the split of such assets.
Cryptocurrencies such as Bitcoin and digital assets such as NFTs, among others, belong to the “intangible” category and are becoming increasingly prominent in contentious divorce proceedings.
Now, the law classifies certain currencies and assets as marital property, even if only one spouse made the investment.
Cryptocurrencies are considered one of the most difficult assets to split.
They are difficult to track and cannot be lawfully recovered by the court since they are deemed “pseudonymous assets.”
This opens the door to deception and concealment, so it is recommended that you be upfront and knowledgeable about all financial aspects of your marriage from the start.
After a divorce, forensic specialists are frequently enlisted to trace the acquisition and sale of cryptocurrencies to verify that all assets are disclosed to the parties.
Couples may also consider tax carryovers (including capital losses, net operating losses, passive activity losses, and charitable donations) as assets in divorce, although this may not be immediately apparent.
All of them have intrinsic worth, similar to that of real estate and cryptocurrencies.
They should be considered in any dispute or settlement involving the division of assets and obligations, since they may be worth considerable amounts of money.
Even seemingly small intangible assets must be examined during a divorce.
When Kris and Caitlyn Jenner separated, for instance, they purportedly agreed to divide their airline miles and credit card points according to the name under which those assets were held.
Individuals with an extensive travel or shopping habit might not always be agreeable to the standard 50/50 split.
Divorce may be messy and sometimes plain selfish when it comes down to it.
The majority of courts will support an equal division of many of these intangible assets; therefore, it is crucial for any marriage to protect itself with prenuptial or postnuptial agreements for the best possible outcome.
Not Just Children Have Custody Arrangements
Our furry friends are becoming a greater part of the family than ever before, making pet custody an important issue for modern couples.
The state of New York adopted a “best for everyone concerned” criterion in 2021 that effectively solves this issue, considering the custody arrangement of dogs similarly to that of children as opposed to perceiving them as property under the prior standard.
In determining how pet custody should be divided, the court considers the parents’ work and travel patterns, living situations, and other relevant facts.
Several states have enacted or are contemplating identical legislation.
Together with Miley Cyrus, Cheryl Burke of Dancing with the Stars was among the numerous celebrities whose pet custody dispute made news.
Ms. Cyrus and her ex-husband Liam Hemsworth were able to settle their differences amicably, but Ms. Burke vigorously pursued the matter in court against her ex, former child star Matthew Lawrence.
She obtained full custody and ownership of the French bulldog Ysabella through a settlement made prior to the case going to trial.
Unquestionably, couples are better off negotiating pet co-parenting arrangements outside of court, but for those who cannot reach a compromise, we recommend researching your jurisdiction’s laws.
Cheryl Burke, the Kardashians, and others act as trend-setters once again, demonstrating that open communication and meticulous planning are essential not only after a divorce but preferably before marriage.