Before You Gallop Down the Aisle…

15 12 2014

There are so many things to consider when deciding whether to marry your beloved.  So many really, really important things like compatibility, having and rearing children, religious beliefs, political leanings, family background, cultural issues, household chores, whether you like the toilet paper over or under – and the list goes on and on.

For horse owners, you have one more thing to consider – what happens with my horse when I marry?  Or you may not currently own a horse, but plan to purchase one after you are married. Who owns it if that is the case? What happens to the horse if you get divorced? Whose responsibility is the horse?

In North Carolina (and many other states), the rule is that if you own something before you marry (in other words, you have a bill of sale for a horse in your name before the date of your marriage), the horse is considered your “separate property” unless you take some action after you are married which transfers the ownership of that horse into your spouse’s name or into your and your spouse’s names together.  If you transfer ownership of your horse to your spouse or to yourself and your spouse after you are married, then the horse becomes “marital property” unless the documents state that the horse is not intended to be marital property but is intended to be either (a) the separate property of your spouse or (b) property held by the two of you as tenants in common, with each spouse’s interest being considered separate property (this latter scenario is somewhat unusual).

Likewise, if you or your spouse purchases a horse after you marry, the horse is considered by law to be “marital property” unless there is something in writing signed by you and your spouse which indicates that you two intend for the horse to be your or your spouse’s separate property.

What is the difference between separate and marital property? In North Carolina, in order to obtain a judgment of absolute divorce, you must be separated from your spouse (i.e., not living under the same roof, generally speaking) for a period of one year (other states may have different time requirements for separation).  When you are undergoing the process of obtaining a divorce, each spouse is entitled to have the jointly owned “marital” property divided through a process called “equitable distribution” wherein marital assets are divvied up between the spouses (typically in equal shares absent some legal reason requiring an unequal division). In order to accomplish this division of assets, the assets have to be valued as of a particular point in time.  North Carolina has defined that point in time for valuation as the date of separation.  So, in summary, generally speaking, when you are getting divorced in North Carolina and dividing up marital property between the spouses, the law requires us to value the marital property for purposes of this equitable distribution/division as of the date you separated from your spouse (and stayed separated for at least a year without ever reconciling).

What does all this information mean?  Well, if your horse is your separate property, then that horse is not treated as a marital asset and its value would not be included in the total value assigned to the marital assets, which value has to be shared with your soon to be ex-spouse.  In other words, if the horse is your separate property, you get to keep the horse, you have all say so on what happens with and to the horse and you don’t have to pay your spouse anything for the horse in order for you to keep it.

On the contrary, if you acquire the horse after you marry, even if the horse is registered and titled in your name alone, the horse is marital property unless your spouse signs something indicating he or she agrees that the horse will be your separate property.  In the event the horse is marital property, the value of that horse will need to be calculated as of the date of separation and that value included in the total value of assets which will need to be divided between the spouses.

The value of a horse which is considered marital property is determined by agreement of the parties (if you can agree) or by an appraisal of the horse, whether formal or informal. For example, the parties might not agree on a value for the horse, but agree that they will permit the horse’s trainer to set a value. Or they may agree to have a professional appraisal done to value the horse and agree to honor whatever value the appraiser sets for the horse.  Ultimately, if the parties cannot agree on a value or on a qualified appraiser, the court can take over and choose the appraiser who will set the value for the horse. Once the value is agreed to or set, then that value is used when considering how best to allocate the assets to the divorcing parties.  If only one spouse wants the horse then it is usually not a big deal because the horse will be “allocated” to that spouse. However, if both spouses want the horse, then the court, in its discretion, may end up making the determination of who gets the horse in the division of property. In rare instances the court may permit the parties to co-own the horse after the divorce if neither side wants to give up their interest and the court deems it to be appropriate to permit co-ownership going forward. It is also possible that the court may order the horse to be sold and the proceeds divided between the parties if the parties continue to dispute the value or allocation of the horse.

So, moral of the story here is that if you are getting married, that is wonderful and exciting!  But be sure that you and your spouse add to the list of things you discuss – prior to walking down the aisle – the issue of horse ownership and whether and how you both envision the situation arising in your marriage so that all parties are on the same page from the beginning. And although it seems somewhat “doomsday” to consider, if you are a planner and like to plan for all contingencies, go ahead and decide who will get the horse if, God forbid, you ever were to divorce. If the worst happens and you do end up separating, it is true that this agreement may disintegrate or be “forgotten” by one of you, but if not, it might prove to help make a very unpleasant process somewhat easier if you both know what is going to happen with your horses.

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 dburch@rl-law.com. I often will answer a short and simple question for free if you are in North Carolina and I have time and know the answer off the top of my head! Or often know good equine lawyers in other states if you need a referral. 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 2014 is $350). 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 (in one way or another, I guess) an advertisement for legal services.

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