How is a vehicle purchased during marriage with the trade-in of another vehicle owned prior to marriage, handled in a divorce?

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How is a vehicle purchased during marriage with the trade-in of another vehicle owned prior to marriage, handled in a divorce?

I had a vehicle I owned and paid off prior to marriage. I traded in vehicle for another vehicle during the marriage. The new vehicle was about $31K; the trade in value for the old vehicle was about $23K. The difference of $8K was financed, of which 15 monthly payments remain. The payoff on the note is approximately $6K. I have not looked at book values on the vehicle but would expect the value has taken a hit of $2K since taking out the loan, or about the same amount that the loan has been reduced through payments thus far. How is this handled in the divorce?

Asked on April 22, 2011 under Family Law, Arizona

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

There is no single answer, since the parties can agree to almost any distribution of assets and liabilities, and further, how each individual asset is treated can differ so long as the total distribution is fine.

Some general rules:

1) A pre-marriage asset is generally the property of the spouse who brought it into the marriage, but that's less clear cut in trade in situation, since the new car was bought during marriage.

2) Even given the above, you may be able to establish that you have a klarger stake in the value of the new car than your spouse owing to the trade in. For example, you say the trade in was worth $23k out of total of $31k. That means that you might be credited with around 75% of the car's value, plus, say 50% of the remaining 25%, or around 85% to 90%. Leaving out the complexity of loans and pay offs for the sake of illustration, say the car was now worth $25k. It might be that if it were sold, you'd get around $21k to $23k of that value.

But again, the car will be fit into the total finacial picture. Being able to document your post-marriage contribution to it can only help you, however.


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