Leased Vehicles During a Divorce
Asset or Liability?
A leased automobile is considered a liability. When you lease a vehicle, it is yours to use until the lease expires. For this, you make a monthly payment. You never actually own the car, and when the contract ends, you must take it back to the dealer who leased it to you and turn it in, or you may usually purchase the car at the end of the lease term. If it was purchased, then it would become an asset, but if there was a continuing payment, that would be a liability.
Leasing to Purchase
This differs from the above in that you may buy the item when the contract expires, so eventually it does become your own. The payment that finally transfers ownership to you will be significantly lower if you have intended to lease to purchase from the beginning. A high buyout figure usually indicates that the contract was not originally designed with the intention of turning ownership over to you.
Leased Vehicles as Part of the Marital Estate
A lease-to-purchase arrangement on a vehicle is handled much the same way as it would be if you were simply buying the car. Because you will ultimately own the vehicle, it is considered an asset and treated as such.
In a true lease situation, the vehicle is not an asset. Because any value that the car had as an asset is counterbalanced by the payments you have to make until you turn it in, it is not considered part of the marital estate.
If You Have Questions
If you need assistance, would like more information or have specific questions, feel free to contact Stephen McDonough, your Dover family lawyer with Next Phase Legal LLC, by calling (508) 359-4043 today. Next Phase Legal LLC is located in Norfolk, MA.