Do you or your spouse have a taste for expensive designer handbags? Have either of you purchased a pair of designer shoes or haut couture designer clothing for yourselves or for each other? If you are getting a divorce, you need to know that these types of high end personal belongings may be key marital assets to be divided in your settlement.
Here’s why: Unlike most personal items that depreciate over time, designer handbags and other designer items often appreciate in worth far more than their initial purchase price. As family law expert Bari Z. Weinberger wrote in a new article for the New Jersey Law Journal, the challenge of a “handbag divorce” is making sure these types of high end personal items don’t get lowballed or completely overlooked during the asset division process.
Here are some of Bari’s tips for determining whether the Birkin bag or Laboutin shoes or vintage Chanel suit are indeed martial assets (as opposed to separate property) and how to go about dividing these items in a handbag divorce.
Tip: Don’t decide on treatment of personal items until you’ve done a thorough inventory
Any item acquired during the marriage generally qualifies as a martial asset to be divided in divorce. In other words, every time you went shopping during your marriage and paid with your joint credit card, whatever personal items you purchased — from shoes and hats to handbags and jewelry – instantly became a marital asset.
In some divorces, spouses may decide to simply assign each other’s personal items in bulk, without bothering with to inventory it. (i.e., what is in your spouse’s closet is theirs, and what is your closet now belongs only to you.) Generally, the reasoning for this is that it’s just too tedious and pointless in most cases to take the time to assign values to second hand clothing that only has thrift shop or yard sale worth. If your spouse has a taste for the finer things, however, this approach could cause you to lose out on thousands in overlooked assets.
Even if your spouse’s designer collection doesn’t include a Crocodile Himalayan Birkin bag, valued at almost a half million dollars, their designer duds could still be worth a pretty penny. If your spouse owns multiple designer items purchased over time, there is a good chance that they have appreciated in value. Thanks to the pandemic, appreciation of some items soared over the past couple of years.
Designer items are not the only personal items with potentially high hidden value. Collections of coins, stamps or comic books can also be more valuable than they appear. Does your spouse play golf or a musical instrument? Some hobby accessories can be worth a lot too.
Rule of thumb: Before agreeing to any “bulk” assignment of personal goods, take time to inventory personal items.
Tip: A Handbag Divorce May Require High End Detective Work
How do you uncover expensive items? For starters, check the garage or attic for things you may have forgotten about. Is there a plastic tote filled with red-soled high heels (a trademark of the Laboutin brand) or an assortment of antiques you bought together on a whim while on a weekend trip? Start looking up their resale value on sites like Ebay or Poshmark (specifically for clothing, shoes and handbags).
If your spouse is moving out, insist on examining everything they plan to take with them. Keep an eye out for things you might not immediately think of as valuable. If you are not a fashionista, you may not stop to consider the significance of a designer label. Names like “Gucci,” “Louboutin,” “Hermès” “Chanel,” “Rolex,” or “Yves St. Laurent” may ring a bell, but these are just the beginning. If a label sounds expensive, look it up. Sure, there are plenty of fakes, knockoffs, and fancy-sounding but cheap labels around, but don’t let that stop you from missing what could be the one diamond needle in the haystack.
If you are not a sports fan but your spouse owns autographed sports’ memorabilia, look up the athlete who signed the ball, bat or boxing gloves. The value of the memorabilia will be linked to the success and fame of the athlete. The same goes for certain autographed books, as well as some vintage, demo, or signed vinyl records.
Handbag Divorce Tip: Determining Personal vs. Marital vs. Separate Property
If you gave the item to your spouse as a gift, does this mean it belongs to them alone? What about gifts your spouse gave you?
People sometimes confuse the words “personal” and “separate,” but these are different legal categories. “Personal property” generally includes not only personal effects, but also all other belongings except real estate. “Separate property” is any property, including real estate, that is not “marital property.” Here are the basics you need to know:
- Property owned before marriage or acquired during marriage as an inheritance or a separate gift from a third party, is separate property.
- Separate property remains separate unless it is commingled (mixed in a way that cannot be disentangled) with marital property. NJSA 2A:34-23(h).
- Property purchased during marriage, including gifts from one spouse to the other, is marital property, unless the source of funding was separate property.
So, for example, if you gave your spouse an engagement ring before marriage, you no longer own it. But if you gave each other valuable items for birthday, Christmas or anniversaries during the marriage, those technically belong to both of you, unless one of you used your own separate property for the purchase. If you owned a designer bag before marriage and after marriage you sold it for $5,000, ownership depends on what you did with the money. If you kept in in a separate account, it is still yours. If you put it into your joint checking account and spent it on joint expenses, it is not.
Sorting out what is separate property and what is marital property can be challenging. It is not enough to know when a purchase was made or a gift received, you need evidence. For purchases made after marriage, you also need to know the source of funds. If you are claiming that a gift you received from a third-party during marriage was intended only for you, and your spouse disagrees, you will need evidence for this as well. The person who claims that the item is separate property bears the burden of proof. Painter v. Painter, 65 N.J. 196, 214 (1974).
Few people retain receipts, even for expensive items, years later. If this is the case, then other evidence can help. For example, you might have a dated photo of the item that shows you owned it prior to marriage.
Equitable Distribution in New Jersey
Any items determined to be marital property must be distributed equitably, meaning fairly, but not necessarily equally. Courts look at factors like how long you were married; your current age and health; your employment history; any education or training you might need to be able to support yourself at a standard of living reasonably comparable to the marital standard; any contributions you made to your spouse’s education or earning power; and your custodial responsibilities for children. The New Jersey equitable distribution statute includes more factors and requires courts to consider all relevant factors, whether listed or not. NJSA 2A:34-23.1.
Handbag Divorce Decisions: Should you keep the Birkin?
Some people have more difficulty with emotional connections to certain items than with dollar values. If this sounds like you, be careful not to let it sabotage your financial future. What if you really want to keep that $50,000 designer collection, but it turns out to be marital property? Maybe you still have an argument under the equitable distribution statute for keeping it. Or maybe you would need to put $25,000 in your spouse’s column to balance it out, and there is nothing available. Don’t let your emotional connection blind you to what you will need to live a comfortable life after divorce.
Fashions and trendy bags may come and go, but your financial security after divorce will never go out of style.
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