Divorce is not a subject about which most of us want to think, but unfortunately, it is a reality far too often. Furthermore, the kinds of issues which can arise in a divorce context when folks in the family own horses are numerous and sometimes complicated. When part of the property being divvied up includes one or more horses, things can sometimes get confusing and, as usually happens when horses are involved, emotional. Because Southeast Equine is distributed among several different states with differing domestic laws and I am licensed only in North Carolina, any specifics I mention will be with regard to North Carolina. If you live outside North Carolina, of course you should consult with a domestic lawyer in your state for specifics about what happens with regard to these kinds of issues in your state.
The first issue which typically needs to be addressed first is the basic issue of whether a horse is marital or separate property. Generally speaking, marital property is property, whether real and personal (a horse is considered personal property), which either spouse acquires during the marriage (with the exception of inheritances or gifts from third parties which are intended for only one of the spouses).
The second issue is often consideration of whether there has been any appreciation during the marriage of either spouse’s separate property, including a horse which is separate property. Depending on whether that appreciation is passive (because of inflation, etc. and not because of anything you or your spouse actively did to increase the value) or active (the result of your or your spouse’s efforts to enhance the value), you may or may not have to consider the appreciation itself as “marital property.” Generally speaking, passive appreciation of separate property during marriage is also separate property and active appreciation of separate property during marriage is marital property.
To put this into an equine context, let’s look at some different situations: (a) when you get married you own (i) a Welsh pony mare named Sally whom you have had since you were a child and (ii) a Thoroughbred mare Josie whom is off the track and whom you retrain as a hunter jumper during the marriage; (b) during your marriage you rescue a Premarin mare/Belgian Draft Horse named Tinkerbell whom you teach to drive; and (c) your mother gives you Chief, a beautiful two year old champion bloodline Quarter Horse gelding for your birthday while you are married and registers him in your name.
As to the pony Sally, she is clearly separate property because you owned her before marriage. And since Sally is older, she likely has not appreciated during your marriage so that we do not have the appreciation issue to consider. What all that means is that if you were to separate and divorce, Sally would likely be treated as your separate property and not part of the “marital estate.”
On to the Thoroughbred mare Josie. Josie is certainly separate property because you owned her when you got married, but you also put a lot of work into retraining Josie as a hunter jumper during the marriage. Let’s say as a result of her new skills, Josie’s value increased by $20,000. That $20,000 of appreciation during marriage will likely be considered marital property because it was mostly caused by your active efforts during the marriage towards retraining her. So that amount of appreciation ($20,000) would be considered as marital property when you are dividing up the marital assets, although the value of Josie on the date of marriage would remain as your separate property.
Tinkerbell the Belgian is an easy one. She was rescued during the marriage and enhanced during marriage by your active efforts and perhaps enjoyed some passive appreciation as well because the demand for Belgian mares is rising as people’s awareness of the Premarin mare situation increases. Because she was acquired during marriage and appreciated during marriage, her entire value post training will be considered marital property.
Chief is a little different because he was given to you by your mother on your birthday and registered by your mother in your name. Because it is pretty clear that your mother intended for Chief to be a gift to just you, he will likely be considered to be separate property. If Chief appreciates during marriage you will have to analyze his appreciation to see if it is active or passive. If active, then the amount of appreciation from the date of marriage through the date of separation will be considered as part of the marital estate while Chief’s value on the day of the gift will still be considered to be separate property.
How’s that for confusing? I will stop here and just mention some of the other issues which arise in a divorce context where equines are involved. There is the issue of valuing the animals as of the date of separation if marital property. If the horse is like Chief or Josie then you ALSO have to have the horse appraised as of the date of marriage (with Josie) or date of acquisition (with Chief) so that you can calculate whether there has been any appreciation (date of separation value minus date of marriage/acquisition value = amount of appreciation). If you have appreciation, then you undergo the analysis of whether it was passive or active, as described above. Getting a horse appraised is not necessarily an easy (or cheap) task, so be prepared to try to agree on a value without having to hire someone if you can and you will save money and time.
The issue of who gets the horses and whether the cost of maintaining and training the horses should be considered when calculating alimony or child support is also an issue. I can make an excellent argument that if my child is a champion rider, the cost of her horse habit should be included when determining the amount of child support or alimony which will be paid (or not paid, depending upon whether you are the paying spouse or the receiving spouse).
While I hope you never have to face these issues yourself, if you do perhaps you will now have a bit of useful information to get you started down the right path!
If you get into a bind and need assistance or just want to ask some questions to avoid getting in a bind, feel free to email me at email@example.com. I often will answer a short and simple question for free if I have time and know the answer off the top of my head! If you don’t hear back from me quickly, it’s not because I don’t love you or think you have a great question or because I don’t know the answer (usually), I’m probably just really busy and haven’t had a chance to email back. And you can always buy the first hour of my time for $250 (my usual hourly rate for 2013 is $325). Lots of folks will save up all their equine (and some corporate or real estate) legal questions and short documents and sit with me for an hour and we will do as much as we can during that hour and it’s only $250. You can check out my Twitter feed @nchorselawyer as well as our firm’s Equine Law Group web page at http://www.rl-law.com/equine if you’re interested, and yes, in addition to providing what I hope are interesting and informative stories, this blog and the Twitter feed referenced above are also advertisements for legal services. I have to tell you that in bold, says the State Bar.