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Proper valuation crucial in divorces involving horse owners

From our Weatherford location, we regularly represent clients facing divorce who own horses for personal use or as part of their involvement in the horse industry in Parker County or surrounding areas. Proper valuation and classification of assets and property is crucial to a fair property division in divorce, so placement of an appropriate value on a horse must be carefully and expertly done.

A step back: Texas property classification and division

We will give a brief overview of Texas property division in divorce to put the horse-valuation question in context,

Often divorcing parties can negotiate a settlement agreement that includes property division. If the parties are unable to agree, then the judge in the divorce proceeding must divide the property for them.

First, because Texas is a community property state, each item of property must be classified as separate or community. Separate property is that which a spouse owned before marriage or that was received by him or her alone by gift or inheritance. After divorce, separate property remains the property of the spouse who owns it.

Community property is almost everything else. Basically, it is everything brought into the marriage by either party (that is not separate) or jointly.

Second, once the property is classified, division can proceed. Community property does not need to be divided right down the middle, rather it must be divided and awarded based on what is just under the family's circumstances.

(Quasi-community property is a third classification, meaning that acquired during marriage like community property, but in another state. It is divided like community property.)

Characterization and division of property may also have been previously agreed upon by the parties in a valid and binding premarital or postmarital agreement.

Classification and division of horse interests

A horse can be a valuable and expensive type of personal property. A family may own one or a few horses for personal use or it could own or have ownership interest in horses as part of a horse-industry business like a ranch, farm, breeding operation, boarding facility, or racing or training operation.

A horse may be separate property if it was owned before the marriage by one spouse or if it was a gift or part of an inheritance received by just one spouse. If it is separate, it will be retained by the owner spouse.

Otherwise, if horses are community property in a marriage, to make the property division just, a fair and proper value must be placed on the animals. If parties are negotiating a property settlement, they may be able to agree on a value, but to be sure the division is fair, it is a good idea to involve a horse appraiser.

If it looks like the property-division decision will go to the judge, each party will want to introduce solid evidence of the value of the horse or horses for the judge's consideration.

Equus Magazine published an article that discusses elements to consider when placing a value on a horse for insurance purposes, which likely are also important in the divorce context. Some of the factors relevant to placing a dollar value on a horse include:

  • Age
  • Gender
  • Breed
  • Purchase price and fluctuations in value since then
  • Training level
  • Discipline
  • Competition success
  • Breeding history, including fertility and quality of offspring
  • Veterinary records and evaluations
  • Market rates for similar animals

The Equus article suggests finding a reputable and experienced horse appraiser that is familiar with the relevant breed and discipline.

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