Divorce and the Family Horse Farm: who gets what?

I've joked that I would make a terrible divorce attorney- not only am I happily married, but my inherent nature to mediate a dispute would cause me to encourage my clients to spend just a little more time in counseling together rather than going to divorce court.  However, with such a high divorce rate in the U.S., I know that divorce is a reality that often requires legal assistance.

California is a community property state, along with Arizona, Louisiana, Idaho, Nevada, New Mexico, Texas, Washington, and Wisconsin.  If you are not from these select jurisdictions, the concept of community property can be a bit strange.  
In essence, the community property principle assumes that all assets acquired during the marriage are presumptively community property, unless one spouse makes a showing of a separate agreement (like a pre-nuptial).

As with most areas of law, there are of course a number of exceptions and misconceptions.  I can't share them all with you in one blog post, but I would like to give you just one example of how Marriage, Divorce, and Community Property are a part of the equine community.

Hank and Wynona (Husband and Wife respectively) own a ranch in California (as community property), but title to the ranch is in Hank's name ONLY.  Hank then decides to sell the ranch to Bob, and tells Bob that he is single.  Wynona learns of the sale about 10 months later.  She demands that Bob reconvey the property back to Hank and Wynona, and she offers to refund the purchase price.
     Can Wynona legally VOID the transfer?
    The law requires that for conveyances of community property real property (i.e., the sale of a ranch), there must be joinder of both spouses, though Wynona must take action to recover the property within a one-year statute of limitations.
If she does so, then too bad for Bob, even if he was an innocent purchaser; he has no rights to the ranch!
Now, if Bob KNEW, or should have known that Hank was in fact married and not single, then there is no statute of limitations for Wynona to render the transaction void.

 A little tidbit for you readers not living in a community property state- watch out if you move to California and subsequently divorce!

      Let's say Hank and Wynona were married in Kentucky, a non-community property state, and lived there happily married for 10 years on a horse farm.  Hank earns a salary from training yearlings, and Wynona is not employed.  Hank then receives a job opportunity to train yearlings at Santa Anita race track in California, so the two of them move to the sunny state, but they do not sell their Kentucky farm.
     Unfortunately, the glitz and glamor of racing in Southern California crumbles their marriage and they file for divorce in the state.

Dilemma: their farm is in Kentucky, a non-community property state, but they are filing for divorce in California, a community property state- what is the court to do?!

For the purposes of divorce, the farm back in Kentucky is considered "foreign real property" and is treated as quasi- community property, and is subject to a 50-50 division.  The California court could choose to:
1. Award the Kentucky farm to Hank and give other assets of equal value to Wynona, OR
2. Require Hank to sign any conveyances that are necessary (force him to buy out Wynona for half the farm value, or sell the farm and give Wynona her 50% interest).

And of course, in a divorce horses will be treated as personal property, not like children/dependents- so no "horse-support" after divorce if you get to keep them, and even worse, you could be forced to sell your horses to divide the community property interest 50-50.

There are possible ways to protect your separate property interests in a horse ranch, or retain a horse as separate personal property and not community property in a divorce, but it does require some skillful legal work ahead of time!

Sorry for the minimal posting, but the bar studying takes precedence.  If you follow my facebook page there are more frequent postings of various news stories, such as:

The video of a blind horse being rescued from a swimming pool after he fell in (prevent liability, prevent injury, safely secure your horses!) 

And other little snippets and photos from my equine life!

Happy SUMMER, and Happy RIDING!

Pet Trust: will your wishes be honored after your death?

Leona Helmsley left $12 million to her dog Trouble at her death, which was just a portion of her $8 Billion estate.  Trouble just died, 4 years after the bequeath.

Trouble Helmsley

Facts indicate Trouble may have needed that $12 million to maintain her lifestyle: she was a television star, featuring in ads for Helmsley's hotels, she wore cashmere sweaters from the finest department stores, and she had a penchant for cream cheese and a Mediterranean diet of steamed vegetables, grilled chicken, and fish... all fed to her by human hand from a silver platter.

Helmsley's heirs raised a ruckus at such a gift to a dog, and Trouble's fortune was reduced to $2 million.
Helmsley had also asked that Trouble be buried beside her in the cemetery, but that too has been denied- Trouble has been cremated, and her ashes are in family custody.

Despite an $8 billion estate, family litigation bit Helmsley's intent from behind

Do you have a beloved horse written into your will?
Are you concerned about the care and upkeep of your herd and personal menagerie of pets after your death?

While the gift to Trouble seems to be on the border of outrageous, the desire to ensure that your animal is cared for after death, at a standard it is used to, is perfectly valid.

Case-law history has been a little inconsistent with gifts to pets- after all, a pet is considered property under U.S. law.  And in this area the law is often quiet sensitive to a state-by-state approach.
It is safer to set up a trust specifically designed to care for a pet, and the assets should be put in the name of the anticipated caregiver, the trustee, rather than the name of the pet itself.
Then when your horse dies, the assets of the pet trust revert to your primary trust and are distributed according to your wishes.

Trust planning is important, and for many horse owners, better than a simple will to provide for the care of your horses.

If you haven't yet prepared a will or trust providing for your pet, I encourage you to make that a goal before 2012.  
But until you meet with your lawyer, today you can prepare a simple letter on your own dictating what kind of care your horse(s) need on a daily-basis and put the letter in an easy to find location.  If you were to drop dead today, would your family and friends know exactly what to do with your horses?  Do you know who would take them, and where they would go?  

As we learn from Leona Helmsley and Trouble, you have little control from the grave (even if you leave $8 billion to your family!), so make sure you have a sound, legal document and plan for your horses and pets.
Remember, verbal agreements and understandings are almost never reliable!

I know wills and trusts is inevitably a morbid subject, but I encourage you to make a plan- for the sake of your horses, and to help prevent fighting or misunderstanding among your heirs and friends.