DVC value during divorce

[AstroBlasters]

Real estate is different and why splitting for DVC can’t be done that way. Since we own an undivided interest….and so, it’s all or nothing.

DVC is not physical real estate like a house, so I see no reason it could not be split if a court really wanted to. I would argue that given the heavy commissions and fees involved with buying and selling DVC (direct or resale) that it would probably be in the best interest of both parties to split over a forced sale.

With that said, if you look further up, I accepted that isn’t something currently done, but that perhaps the new “trust concept” would make it easier.

That is when a poster brought up other financial assets, like tbills… a concept that I am very familiar with.

 

[Sandisw]

DVC is not physical real estate like a house, so I see no reason it could not be split if a court really wanted to. I would argue that given the heavy commissions and fees involved with buying and selling DVC (direct or resale) that it would probably be in the best interest of both parties to split over a forced sale.

With that said, if you look further up, I accepted that isn’t something currently done, but that perhaps the new “trust concept” would make it easier.

That is when a poster brought up other financial assets, like tbills… a concept that I am very familiar with.

I would contend to a certain extent it is like one and that a court would have no jurisdiction to order DVD to violate the terms of our contracts.

I mean, why should divorce be any different than say parents who have two children and want to be able to split it to give each half the contract?

May be nice for people to avoid the fees to sell, but that is the product we own.

 

[crisi]

DVC is not physical real estate like a house, so I see no reason it could not be split if a court really wanted to. I would argue that given the heavy commissions and fees involved with buying and selling DVC (direct or resale) that it would probably be in the best interest of both parties to split over a forced sale.

With that said, if you look further up, I accepted that isn’t something currently done, but that perhaps the new “trust concept” would make it easier.

That is when a poster brought up other financial assets, like tbills… a concept that I am very familiar with.

Pretty simply because the Court can not order an uninvolved third party to do something to satisfy the conditions of a divorce. The retirement funds have basically a carved out exemption because when that carve out was put in place (and still today), often one partner would not work at all or work only sporadically. These people - usually women - were left high and dry with little to rely on if their husband's left them after twenty five years of marriage. Therefore, retirement assets are dividable.

Stock funds are individual units of stock. If I have 300 shares of AT&T (currently trading around $19), The judge can give me 150 shares and my partner 150 shares in the divorce. Not a big deal. But if I have a single A Share of Berkshire Hathaway - currently trading at $657,000 or so, the court can't make Berkshire Hathaway split that share into 1500 B Shares. If I divorce, we are selling that share or I'm giving my partnter $657k worth of other marital assets.

"But we have points!" - except we don't. We have a contract that by the terms of the contract cannot be split into multiple contracts where points are simply a representation of how much real estate interest you own. Forcing Disney to do so would go against Disney's contract, and create a burden for Disney for a situation in which Disney is not a party.

I may have gotten this a little wrong - I am not an attorney (but have taken a few law classes and worked with contract law a long time - but never family law). But drusba is an attorney and her analysis here has proven to be spot on as far as I know. Laws will also vary by state, but the principles behind the laws tend to be fairly consistent. If you want to understand more, might I suggest law school?

 

[AstroBlasters]

Pretty simply because the Court can not order an uninvolved third party to do something to satisfy the conditions of a divorce. The retirement funds have basically a carved out exemption because when that carve out was put in place (and still today), often one partner would not work at all or work only sporadically. These people - usually women - were left high and dry with little to rely on if their husband's left them after twenty five years of marriage. Therefore, retirement assets are dividable.

Stock funds are individual units of stock. If I have 300 shares of AT&T (currently trading around $19), The judge can give me 150 shares and my partner 150 shares in the divorce. Not a big deal. But if I have a single A Share of Berkshire Hathaway - currently trading at $657,000 or so, the court can't make Berkshire Hathaway split that share into 1500 B Shares. If I divorce, we are selling that share or I'm giving my partnter $657k worth of other marital assets.

"But we have points!" - except we don't. We have a contract that by the terms of the contract cannot be split into multiple contracts where points are simply a representation of how much real estate interest you own. Forcing Disney to do so would go against Disney's contract, and create a burden for Disney for a situation in which Disney is not a party.

I may have gotten this a little wrong - I am not an attorney (but have taken a few law classes and worked with contract law a long time - but never family law). But drusba is an attorney and her analysis here has proven to be spot on as far as I know. Laws will also vary by state, but the principles behind the laws tend to be fairly consistent. If you want to understand more, might I suggest law school?

Did anyone read the second part of my post or did everyone stop at the first part and then write a response?

 

[gmi3804]

DVC is not physical real estate like a house, so I see no reason it could not be split if a court really wanted to. I would argue that given the heavy commissions and fees involved with buying and selling DVC (direct or resale) that it would probably be in the best interest of both parties to split over a forced sale.

A co-op isn't physical real estate either. And it's not about a court's "really wanting to" split an interest.

 

[crisi]

Did anyone read the second part of my post or did everyone stop at the first part and then write a response?

Did you read my response? The Courts can't make DISNEY do anything, they aren't an interested party in this civil matter.

 

[gmi3804]

Did you read my response? The Courts can't make DISNEY do anything, they aren't an interested party in this civil matter.

Maybe if they "really wanted to...."

 

[crisi]

Maybe if they "really wanted to...."

They would still be restricted to the terms of the contract they are party to - which says they can't split it.

 

[CarolynFH]

perhaps the new “trust concept” would make it easier.

I see your point - since buying into the trust does not mean owning a certain percentage of a specific cabin, in contrast to “traditional” DVC contracts deeding ownership of a specific percentage of a given building. I can’t remember seeing an analysis of the CFW ownership documents, so I don’t know whether the trust ownership allows for splitting one contract into multiple contracts or not. There may or may not be stipulations in the ownership documents that determine whether it’s possible or not.

It doesn’t help OP, of course.

 

[gmi3804]

They would still be restricted to the terms of the contract they are party to - which says they can't split it.

Duh. I guess I need a sarcasm emoji.

 

[crisi]

Duh. I guess I need a sarcasm emoji.

That's what the smile was for.

 

[AstroBlasters]

Did you read my response? The Courts can't make DISNEY do anything, they aren't an interested party in this civil matter.

Your response didn’t address that I already accepted that they aren’t being split and had moved on.

 

[Sandisw]

I see your point - since buying into the trust does not mean owning a certain percentage of a specific cabin, in contrast to “traditional” DVC contracts deeding ownership of a specific percentage of a given building. I can’t remember seeing an analysis of the CFW ownership documents, so I don’t know whether the trust ownership allows for splitting one contract into multiple contracts or not. There may or may not be stipulations in the ownership documents that determine whether it’s possible or not.

It doesn’t help OP, of course.

It does not allow a contract to be split. I have the POS and those terms are the same. So, while you get a RTU of X points not tied to a specific unit, it’s still one contract that can’t be changed later on.

Being part of the trust does not give one flexibility to ask that a one contract become two or more later on.

 

[CarolynFH]

It does not allow a contract to be split. I have the POS and those terms are the same. So, while you get a RTU of X points not tied to a specific unit, it’s still one contract that can’t be changed later on.

Being part of the trust does not give one flexibility to ask that a one contract become two or more later on.

Thanks for resolving that question.

 

[Yinn]

My sister is currently going through a contentious divorce in Michigan after 24 years and they both have lawyers. They have 2 DVC contracts, 150 points at SSR and 150 at AKV. She wants both since husband hasn’t been to Disney World in 10 years and has no interest in going. During those 10 years, she and/or her kids used the points or she let our brother use them.

Husband wants $60,000 for both contracts. He said he called Disney and was told each contract was worth $30,000. He has no proof, just his word. They didn’t even pay that much when they bought the contracts, so my sister had a good laugh at that. She called Disney and was told to check resale sites for approximate value. She did that and has screen shots of what contracts like hers are going for, which she included in her counter-proposal. Husband is contesting her screen shots as proof and now wants to each take a contract. They’ve been going back and forth on pretty much everything, so they’ve going to trial in September.

The contracts are really important to her. Going to Disney with her kids was one of the few bright spots in her marriage, so she plans to fight for them. Her husband knows this, so she thinks he’s using them to hurt her. She has no problem buying him out, but not at $60,000 for both. Her lawyer knows nothing about DVC, but she thinks showing the judge the resale values will be enough to give him a valuation amount to settle on.

For those who have experience with divorce and DVC, is a resale site good enough or accurate enough for a judge? Or any advice I can pass along to her? Thank you in advance.

First question is, are they blue card or white card contracts? That affects the value - not on the resale market but from a replacement cost perspective.

They may only be worth $12,600 SSR and $13,500 AKV (instant sale) on the resale market but replacement cost for them is much higher if she has blue card and wants them again. It would be $30,750 for SSR and $31,500 for AKV.

In that’s situation the $60,000 is reasonable…but there are better ways to do this.

Here’s what I would do. Sorry hun, they’re valued at $62,250 and I’m not going to fight for them. YOU take it. That’s a $62,250 on the books in favor of him.

Ask for $62,250 of asset value or cash in return.

I would then go resale market for 150 SSR. You can get that around $90/pt for $13,500.

Resale for AKV for around $100/pt or $15,000.

You’re whole on the points but not blue card so I would then add on cabins or Riviera or your choice for $225/pt for the blue card for $33,750.

Total cost: $62,250. Still have blue card, and an extra 150 points at the same cost. Rent out or use the new 150 points as you desire.

 

[Bearval]

My sister is currently going through a contentious divorce in Michigan after 24 years and they both have lawyers. They have 2 DVC contracts, 150 points at SSR and 150 at AKV. She wants both since husband hasn’t been to Disney World in 10 years and has no interest in going. During those 10 years, she and/or her kids used the points or she let our brother use them.

Husband wants $60,000 for both contracts. He said he called Disney and was told each contract was worth $30,000. He has no proof, just his word. They didn’t even pay that much when they bought the contracts, so my sister had a good laugh at that. She called Disney and was told to check resale sites for approximate value. She did that and has screen shots of what contracts like hers are going for, which she included in her counter-proposal. Husband is contesting her screen shots as proof and now wants to each take a contract. They’ve been going back and forth on pretty much everything, so they’ve going to trial in September.

The contracts are really important to her. Going to Disney with her kids was one of the few bright spots in her marriage, so she plans to fight for them. Her husband knows this, so she thinks he’s using them to hurt her. She has no problem buying him out, but not at $60,000 for both. Her lawyer knows nothing about DVC, but she thinks showing the judge the resale values will be enough to give him a valuation amount to settle on.

For those who have experience with divorce and DVC, is a resale site good enough or accurate enough for a judge? Or any advice I can pass along to her? Thank you in advance.

The soon to be ex is using direct pricing which is not how it would work in a divorce. It would be based upon the valve of the asset if it were to be sold today. She needs to educate her lawyer on what DVC is ( it is a Timeshare) and get appraised values from brokers. I would also ask the brokers to provided appraisals with a breakdown of the fees she would incur selling the contracts. This could help her negotiation in trying to keep them by giving her some wiggle room by agreeing to use the resale value without the fees if she keeps them, but if sold the ex would only get his share of this asset minus the fees which will be less. Make sure she get a separate appraisal for each contract so she can decide which one she would like to keep in the divorce just incase she cannot afford to buy your ex out of both. If it were me and the ex wants to be a p&%#k and not move off his valuation , I would just let them be sold and buy want I want in resale. She will lose your direct benefits and the ability to use the new resorts but it would most likely be the wiser decision financially.

 

[drusba]

Did anyone read the second part of my post or did everyone stop at the first part and then write a response?

The same no-split problem exists with the new trust system adopted for CFW, under which the main thing one is purchasing in the contract with DVD is points (and points are not designated in the CFW POS to just be symbols of what is owned), If you have not seen one yet, you can go online to the Orange County assessor's site and see a copy of one of the deeds that have already been issued for CFW. The deeds expressly prohibit the total ownership points purchased by the named owners, or any successive owners, from being divided without DVD's consent, but DVD can do so upon transfer of the points back to it. As a result, a court in a divorce proceeding would be unable to order the split of the points without getting DVD's consent.

 

[AstroBlasters]

The same no-split problem exists with the new trust system adopted for CFW, under which the main thing one is purchasing in the contract with DVD is points (and points are not designated in the CFW POS to just be symbols of what is owned), If you have not seen one yet, you can go online to the Orange County assessor's site and see a copy of one of the deeds that have already been issued for CFW. The deeds expressly prohibit the total ownership points purchased by the named owners, or any successive owners, from being divided without DVD's consent, but DVD can do so upon transfer of the points back to it. As a result, a court in a divorce proceeding would be unable to order the split of the points without getting DVD's consent.

Well, if 40%+ of marriages end in divorce then IMO Disney should change that policy because it’s not in the best interest of membership…. especially with new resorts having restricted resale points that take a significant devaluation on the resale market. (I.E RIV contracts selling for $107pp and the new VDH going for $130pp)

 

[bumbershoot]

I hope your sister is doing OK. I'm so sorry she's dealing with this.

I wonder if DVC could divide a contract with a court order….

Disney doesn't seem to have protocols in place to do that, so they can't be forced to do it. Maybe someday they will, but I'm not sure what's in it for them.

If the husband in the scenario actually WANTED the points and they weren't being contentious, they could do what we did during divorce since he didn't care about the contract and knew I couldn't sell then repurchase enough points. We used LT Transfers and did the gratuitous family transfer before the divorce was final. Easy. But this guy doesn't actually want the points. It's sad, since even though the kids might be grown they might still have wanted to go with dad, especially since it sounds like he hadn't been in a long time.

 

[AstroBlasters]

Maybe if they "really wanted to...."

I’m not sure why you are having such a condescending attitude.

Most financial assets that are not physical assets can be split and so this the fact that DVC can not makes them an outlier (even if it is standard for timeshares) and adds an additional level of risk for purchase for direct points of a restricted resort.