22 Apr What happens to a car’s sale price in a divorce settlement?

Q. What, if anything, should be listed in the sale amount if a vehicle is part of a divorce? The plaintiff received a $12,500 credit in mediation for said vehicle, which is about half the value. The plaintiff now has to sign the title over to the defendant, but is unsure what amount to put in the sale price.
— Splitting up

A. In order to successfully record the transfer of ownership of a vehicle, it is important to sufficiently and accurately complete a bill of sale.

A bill of sale is a legal document that reflects the terms of the transfer and typically includes information that identifies the buyer and the seller, the date the vehicle is transferred and the purchase price of the vehicle, among other information, said Jeralyn Lawrence, a family law attorney with Lawrence Law in Watchung.

Given that the plaintiff received consideration for his or her share of the value of the vehicle as part of equitable distribution in the form of a payment of $12,500, the purchase price on the bill of sale could take several different forms, she said.

For example, it might be permissible to use the sum of $12,500, the actual consideration the plaintiff received, when representing the purchase price on the bill of sale, Lawrence said.

Alternatively, it might be appropriate to use the actual value of the vehicle as agreed upon by the plaintiff and defendant at the time of the divorce.

Finally, she said, and if a sales price cannot easily be determined, it might be sufficient to state $1 as the purchase price.

“While nominal consideration, $1 at least satisfies the consideration requirement of any contract such that some amount was received in exchange for the vehicle,” she said. “However, it is important that these options be thoroughly discussed with the appropriate motor vehicle agency as any bill of sale may have tax implications, and a motor vehicle agency, or tax professional, may be able to further guide the plaintiff to explain the most appropriate way to complete the bill of sale.”

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This story was originally published on April 22, 2022.

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