For many divorcing couples, dividing assets is a complex and contentious process. Besides financial value, belongings often have emotional significance—especially when trying to untangle what belongs to whom and who should get what at the end of a marriage. These are not small matters—your divorce settlement will seriously impact your life and financial outlook after divorce.
To know what to expect from the process, it’s first essential to understand your state’s laws regarding asset division. California is a community property state, meaning that everything acquired during a marriage is generally considered shared property and will be divided 50/50 in a divorce. Assets that were individually owned before the marriage remain separate property. However, there may also be commingled property, assets brought to the marriage by one partner that becomes mixed with joint funds.
What is a Handbag Divorce?
When we think of property division, especially in high-asset divorces, the obvious big-ticket items come to mind—stock portfolios, real estate, high-end vehicles, perhaps a yacht or art collection.
Even though, legally, everything you’ve bought since you got married is marital property to be divided equally, for the sake of simplicity, couples often lump “smaller” personal effects together, each spouse keeping what’s in their closet, for example.
But in doing so, they may be overlooking significant marital assets.
Does one of you have a taste for luxury handbags, heirloom quality timepieces, or haute couture? You may have a handbag divorce on your hands (or arm, as the case may be).
Luxury goods are an unusual type of asset. Unlike most products, which depreciate over time, luxury items may increase in value. Some have risen dramatically in recent years. For example, certain designer handbags soared by 17% during the pandemic and high-end watches by 5% in 2020 alone.
Louis Vuitton, Hermes, Chanel, Gucci, Rolex, Patek Philippe… even if you recognize the big names, you may not know what these items are worth. The most coveted items and limited editions can be valued at tens or hundreds of thousands of dollars.
If you don’t know a Birkin bag from Birkenstock, you’ll need to do some research, such as looking up labels and identifying a brand’s rare or vintage items. (A Diamond Himalaya Birkin 30 recently sold at Sotheby’s for nearly half a million dollars).
It’s not just fashionistas that may have valuable goods hiding in plain sight. Perhaps your spouse has a quirky collection in the attic or den, such as sports memorabilia or autographed books. Investigate the names of the players or authors, and find out what their game ball or John Hancock is worth. In September 2022, Michael Jordan’s 1998 NBA Finals Game 1 jersey sold for a whopping $10.091 million. A month before, a 1952 Topps Mickey Mantle card in mint condition fetched $12.6 million at Heritage Auctions. A signed first edition of Harper Lee’s masterpiece To Kill a Mockingbird may be worth $20,000 or more. A personal letter signed by F. Scott Fitzgerald sold for $90,000 almost two decades ago.
It’s critical to know what you have and what it’s worth. Be wise—avoid bulk appraisals; thoroughly inventory everything you own, preferably before one spouse moves out. Keep a document that details when each item was acquired, by whom, and with what funds. People don’t always hang onto receipts for years at a time. If you disagree on ownership, other evidence may become necessary, such as a picture of you wearing the Louboutin heels before you married.
Remember that community property does not mean all assets will be split “in kind” (dividing the asset itself, which is simple enough with cash but impossible with a fancy purse). It means that each of you is entitled to equal value. That may mean you each receive an equivalent asset, or that you sell a valuable item and divide the proceeds, or that one person buys out the other’s share of an asset. Just be mindful of what you’re willing to part with to keep the crocodile handbag.
The experienced family law attorneys at SFLG can help you navigate the division of property, even in a complex high-asset or handbag divorce. We’re dedicated to helping you achieve a favorable outcome, whether you reach a settlement or go to court.
by Debra Schoenberg