The Revenge Lexus. The Jane Holster Story
It is no secret divorcing spouses sometimes look to “get even” with their soon to be ex. Or look for ways to punish their spouse for perceived wrongdoings during the marriage.
One common tactic to harm their spouse on their way out the door is to make an expensive purchase. For example, they purchase a new car with their spouse’s credit and then file the divorce. Their hope is to leave their spouse with the debt while they keep the car. Unfortunately, the revengeful spouse will be disappointed with this strategy.
This is what happened with Bob and Jane Holster. They had been married twenty-two years. Bob worked throughout the marriage while Jane stayed home to raise the children. One day Jane discovers Bob’s weekend golfing trips are really romantic getaways with a younger woman. Jane confronts Bob and the divorce fireworks start. Bob declares he wants a divorce because he is in love. Jane is devastated and beyond angry. Jane decides to get revenge.
The next day Jane buys herself a brand-new expensive Lexus, using Bob’s credit. She trades in her paid off Toyota for a shiny new convertible. Jane laughs (and cries) all the way home from the Lexus dealership. She is thinking about all the fun and sun she’ll have in her new convertible while Bob is stuck making the payment.
It’s hard to blame Jane for buying the Lexus and sticking Bob with the bill. Most people (but not the court) would applaud Jane for getting even for the affair. Most people would applaud her for “figuratively” running over Bob’s finances with the Lexus! But from a legal standpoint, Jane has made a mistake. Jane only made the divorce harder on herself.
Las Vegas divorce courts follow community property rules, which simply means that all assets and debts acquired during a marriage belongs to both parties, equally. In a divorce, the court will divide the assets and debts equally. Jane’s purchase is an asset with a debt. The Lexus was worth $80,000 while the debt was $85,000. Everyone knows vehicles lose value the moment they are driven off the dealership lot. When an asset is a debt the courts tend to align the debt with the asset. For example, student loans are debt that go with the education, which is the asset.
In this situation the court would likely award Jane the vehicle and the debt. She purchased the vehicle. She intends to drive the vehicle. The court will give her the vehicle in the divorce. They will also give her the matching debt. Jane would be responsible for making the payment on the nee Lexus.
What if Jane would have purchased it with cash they had in a bank account? This scenario does not fare much better. Now Jane has an asset worth $80,000. The court will look to divide the value of the asset. In other words, Jane will need to pay Bob $40,000 to keep the vehicle. Jane can choose to sell the vehicle. You are not forced to take an asset. She can sell the vehicle and split the proceeds evenly with Bob. But selling the vehicle creates another issue.
Jane paid $85,000 for the vehicle. A month later she can only sell it for $80,000 at Car Max or Craigslist. That means the community lost $5,000 because of Jane’s revenge purchase. In Nevada, like most community property states, a spouse can be guilty of “marital waste.” Marital waste occurs when one spouse squanders community assets, or incurs a community debt, in an irresponsible manner. In Jane’s case, her purchase of the Lexus was wasteful. Her purchase caused the community to lose $5,000. Jane will be responsible for this waste.
Jane’s $5,000 in wasteful spending will be taken out of her share of the other community’s assets. Not sure you see the waste? Consider this similar example. Suppose instead of spending $85,000 on a new Lexus that is now only worth $80,000, Jane squandered away $5,000 at a casino. The court would view the gambling as marital waste. The $5,000 in gambling debt would be taken out of Jane’s half of the community assets.
You might be asking, “what about Bob’s affair”. His actions caused this chain of events. Jane would have not purchased the vehicle if he would have been faithful. Nevada is a “No Fault” divorce state. All states are. This means that spouse is not punished for asking for the divorce or being the reason for the divorce. Bob will not be punished for having an affair. Bob may be held liable for any community money he spent on the affair. This is also marital waste. But giving Jane more of the assets or less of the debts because of Bob’s indiscretion is not something the court can legally do.
In sum, Jane’s “Revenge Lexus” will probably come back to haunt her. A wise judge once said, she who seeks revenge should dig two graves. Incurring a needless debt or irresponsibly spending assets during a divorce, regardless of what your spouse did to cause the divorce, is not a good tactic. Making a big purchase in your spouse’s name will not stick that spouse with the debt. That debt will usually become the sole debt of the spouse who made the wasteful purchase.
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