The Value’s in the Bag: How to Value Property During Divorce

Written by: Tracy Augustin

 

I recently tried a case in which the main issue in dispute was how to value property during divorce.  I’m not just talking about any property though.  I’m talking about a handbag collection. 

 

Yes, you heard me right…a handbag collection.  There were no retirement accounts involved.  No stocks and bonds.  No traditional financial investments.  Nope.  There was just a collection of handbags.

 

And you probably figured it out already, but the handbags within this collection weren’t your run of the mill everyday handbags. 

 

No. 

 

These handbags were luxury designer handbags.  For those of you who are fashionistas, you have probably heard of the exclusive and elusive Hermès Birkin Bag. 

 

For those of you her aren’t familiar with the Birkin Bag, let me fill you in on the little bit I know.

My first experience learning about this highly sought after bag was from watching the television show “Sex in the City,” starring Sarah Jessica Parker.  I distinctly remember Samantha Jones (one of the four main characters) wanting a Birkin Bag so badly that she would stop at nothing to get it, which included lying to get one, after finding out she was on a wait-list.  Of course, the lie caught up to her, and she didn’t get to keep the bag in the end, but to Samantha, the Birkin was worth the risk.  And, as Samantha so eloquently put it in that memorable episode, “it’s not a bag, it’s a F*&!#@$ Birkin!”

 

(Watch the short video below for more info on the highly sought after Birkin.)

So, when dealing with these luxury goods, the question becomes, “How do you value property during divorce in a way that a Judge is going to understand and agree with?”  The simple, but expensive, answer would have been to hire an expert to testify regarding the value of these handbags.  However, if an expert witness is not in your trial budget, there are some less expensive ways to present your case.

 

For example, depending on how much time you have, you may try contacting some consignment shops or auction houses that deal with the specific good to find out resale values of items.  If you are short on time, you may try looking up values of items on various websites that sell the specific goods.  In the case I was involved in, we were able to find values of similar handbags, and interestingly enough, some of the handbags (mainly the Birkins) actually did increase in value over time.  As a matter of fact, my client testified the handbags were purchased by the parties as investments.

 

Aside from assigning value to the handbags, the other hurdle that needed to be overcome in my case was Wife’s testimony that the handbags were purchased for her by Husband as gifts.  According to Arizona Community Property Law, property that is acquired by a spouse during marriage by gift is the separate property of that spouse.  (A.R.S. § 25-213(A).)  However, the burden of proof is on the spouse that is claiming that a piece of property was gifted to them.  Fortunately, in my particular case, the Court found that Wife had not met her burden of proof, and therefore, the values of the handbags were subject to equitable division.  Had the Court made a finding that the handbags were gifts, my client could have potentially been out tens of thousands of dollars.

 

So, there you have it.  Before you or your Wife makes a purchase for the next big ticket luxury item, you may want to consider how to value property during divorce in the case of a breakup.  Although it may sound cynical, something as crazy as yours or your spouse’s hobby/collection may be the subject of great debate in the event of a divorce.  My biggest regret in the case is not subpoenaing the Birkin Bags for a personal inspection!

 

For more information on purchasing your first Birkin bag, check out this interesting and recent article I found in Forbes Magazine.

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