Yachts are among the most valuable and complex assets that couples may own during their marriage. However, when a marriage ends in divorce, the question of who gets to keep the yacht can be a source of conflict and confusion. Depending on the state where the divorce is filed, the laws governing yacht ownership after divorce may vary significantly. Here are some of the main factors that affect yacht ownership after divorce in different states.
Marital Property vs. Separate Property
One of the first steps in determining yacht ownership after divorce is to classify the yacht as either marital property or separate property. Marital property is generally defined as any property that was acquired by either spouse during the marriage, regardless of whose name is on the title or deed. Separate property is generally defined as any property that was owned by either spouse before the marriage, or that was acquired by either spouse during the marriage by gift, inheritance, or other means that did not involve marital funds.
In most states, marital property is subject to equitable distribution, which means that the court will divide it fairly, but not necessarily equally, between the spouses. Factors that the court may consider in equitable distribution include the length of the marriage, the contributions of each spouse to the marriage and to the acquisition of property, the income and earning potential of each spouse, the needs and circumstances of each spouse, and any other relevant factors. Separate property, on the other hand, is usually not subject to division, and remains with its original owner.
Therefore, if a yacht was purchased by either spouse during the marriage with marital funds, it will likely be considered marital property and subject to equitable distribution. However, if a yacht was owned by either spouse before the marriage, or was acquired by either spouse during the marriage with separate funds or as a gift or inheritance, it will likely be considered separate property and not subject to division.
Community Property vs. Common Law Property
Another factor that affects yacht ownership after divorce is whether the state where the divorce is filed follows community property or common law property rules. Community property states are those that treat all property acquired by either spouse during the marriage as belonging equally to both spouses, regardless of whose name is on the title or deed. Common law property states are those that treat property acquired by either spouse during the marriage as belonging to the spouse who purchased it or whose name is on the title or deed, unless there is evidence of a different intention.
There are currently nine community property states in the US: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin1. In these states, yachts that were acquired by either spouse during the marriage are considered community property and subject to a 50/50 split between the spouses upon divorce. However, there may be exceptions or adjustments based on factors such as prenuptial agreements, commingling of funds, reimbursement claims, or economic circumstances.
In common law property states, which are all other states except for Alaska (which allows couples to opt into community property rules), yachts that were acquired by either spouse during the marriage are considered separate property unless they were purchased with joint funds or titled in both names. In these states, yachts that are classified as separate property will remain with their original owner upon divorce. However, yachts that are classified as marital property will be subject to equitable distribution based on various factors.
It is always advisable to consult with an experienced family law attorney to discuss your specific situation and options.