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Property division challenges: Dividing horse breeding agreements

Owning a winning race horse or show horse can be a very proud accomplishment that oftentimes goes beyond the trophies, titles and prize money. If a horse gains enough notoriety, it may become a prized breeding animal as well, which can lead to breeding agreements and stud fees that can greatly increase an owner's wealth over time.

But the challenge to these contractual agreements doesn't just lie in the complexity of the language used to draft them, it also lies in one seemingly simple question: How is the agreement treated during divorce proceedings?

While most people hope their marriage lasts a lifetime, most people know this isn't always the case and that it's always possible for divorce to rear its ugly head. When this happens for horse owners and breeders, knowing how to classify a breeding agreement can mean the difference between a less contentious division of assets or more contentious negotiations.

How are breeding agreements classified?

In California, for the sake of property division, property is defined as anything that can be bought or sold, and anything that has value. Because a breeding agreement can provide substantial income over time, it's safe to say a breeding agreement would be classified as property.

Is the agreement community or separate property?

Because a breeding agreement is considered property, it must then be classified as either separate property - assets or debts acquired prior to the start of a marriage - or community property - property or liabilities accrued during the course of marriage.

For some horse owners and breeders, this may be the most challenging part of property division, because it requires them to consider when the horse was purchased, when the breeding agreement was signed, how much money has been or will be collected over the course of the agreement and whose names appear on the agreement. If parties disagree on any one or combination of these points, negotiations can turn contentious.

Getting legal help during a difficult process

Because of the sheer nature of breeding agreements - or really any complex asset - it's good to have someone you can turn to for legal advice during divorce proceedings, such as an attorney with experience handling complex property division. Understanding the intricacies of the law may not be your forte but it is for a lawyer. That's why seeking legal representation during a divorce is never a bad idea.

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