Why luxury watches matter in family-law property division
Luxury watches have several features that make them particularly troublesome in a divorce context:
- Investment value: What might have been purchased as a luxury accessory can appreciate significantly over time. Collectible models, discontinued runs and well-maintained examples can command much more on a resale market than the original purchase price.
- Ease of concealment or undervaluation: Unlike real estate or publicly traded securities, a watch can be removed, stored, transferred, or mis-represented relatively easily. Receipts may be missing, the serial numbers may not be known, or the value may be hidden in plain sight.
- Marital asset classification risk: If purchased during the marriage from marital funds (or funds that should be treated as matrimonial property), then the watch may be divisible property — even if only one spouse’s name is on the receipt.
For Ontario practitioners, this means that in any separation where there is high value, a luxury timepiece must not be overlooked in the financial-disclosure, valuation and division process.
Key issues: Ownership, classification, valuation and disclosure
Classification: marital vs separate property
In Ontario, the division of property for married spouses is governed by the Family Law Act, 1990 (FlA). While the FLA presumes an equalization of net family property for married couples, there are still key steps: determining the date of separation, valuing assets at that date, and determining excluded property. A luxury watch may be:
- Excluded property if it was owned before the marriage, or inherited, or gifted (subject to some conditions).
- Matrimonial (marital) property if acquired during the marriage and is not otherwise excluded.
A spouse might argue the watch was acquired before the marriage, or gifted or inherited — but if it was purchased during the relationship from family or joint funds, the watch may form part of the equalization calculation.
Valuation
Valuing a luxury timepiece is not straightforward. The determining factors include:
- Brand, model, serial number, production year
- Condition (scratches, servicing, original box and papers)
- Market demand, rarity, resale value trends
- Evidence of purchase price, service history, provenance
An appraisal by a specialist luxury-watch appraiser is often necessary. Using a generic jewellery appraisal may under-value the item. If one spouse accepts a division without fully valuing the item, they risk losing significant value.
Disclosure and risk of concealment
Given their portability and the ease of transferring or hiding them, luxury watches are at elevated risk of being concealed, sold, or swapped out for cheaper look-alikes. Some red flags:
- A watch “sold” or missing just before the separation date
- Lack of supporting documentation (receipts, insurance schedules)
- The spouse offers a lower value than comparable market evidence
- One spouse claiming the watch was separate property without proof
Ontario family law proceedings allow for full financial disclosure and discovery. A spouse challenging concealment may seek production of credit-card records, receipts, insurance schedules, photographs, service records and expert reports. If non-disclosure is demonstrated, remedies include revisiting the equalization, awarding costs, or even sanctions for mis-conduct in disclosure.
Division of the watch within the equalization framework
Once the watch is classified and valued, parties (or the court) must deal with how it is incorporated into the equalization of net family property (NFP). Some options:
- One spouse keeps the timepiece, and the other receives an offsetting asset of comparable value (for example, a share of the family home equity, investments or other property).
- The watch is sold and the proceeds divided.
- The parties agree on a trade-off (one keeps the watch, the other a different asset) based on their preferences, needs, contribution, and the balancing of NFP.
Importantly, because the FLA mandates “equalization” (subject to excluded property) for married spouses, undervaluing the watch or excluding it wrongly may result in one spouse unintentionally absorbing a substantial financial loss.
Practical steps for counsel and clients
Here are some practical strategic tips for family-law practitioners and their clients when luxury watches are in play:
- At the outset of financial-disclosure, ask specifically about “high-value personal property” such as luxury timepieces, collectible watches, rare jewellery, art or high-end accessories.
- Require detailed schedules: brand, model, serial number, purchase date, value at purchase, service history, current condition, insurance schedule, original box and papers.
- If a watch is identified, obtain an independent specialist appraisal rather than relying on a generic jewellery appraisal.
- Scrutinize the opposing party’s asset list carefully for signs of missing or substituted watches. Follow up with document production — e.g., credit-card statements, storage/locker agreements, insurance schedules.
- Incorporate the watch valuation into the overall NFP equalization and ensure that any settlement reflects the true value.
- Consider timing: if the separation date is imminent or already passed, ensure the valuation date aligns properly; if the watch is sold after separation without proper offset, a claim may rise for unequalization or fraudulent transaction.
- Ensure settlement agreements (or court orders) expressly deal with the watch: who retains it, whether it will be sold, how value is offset, how future appreciation is handled (if relevant).
- Consider tax consequences: while personal property generally receives no preferential tax treatment in Ontario, the sale or transfer of a high-value timepiece may trigger capital gains or other tax issues depending on country of residence, and should be reviewed by tax counsel if necessary.
Luxury watches such as high-end models from Rolex are no longer mere accessories in the context of family-law separations. In Ontario they can form a significant slice of marital property, requiring close attention from both counsel and clients in disclosure, valuation and equalization. Failing to properly address these assets can lead to an inequitable outcome or later disputes.
For practitioners at firms such as Russell Alexander Collaborative Family Lawyers and others advising clients in high-net-worth cases, a luxury timepiece should ring like a warning bell: time matters, value matters, and the wristwatch that seems innocuous today can become tomorrow’s contentious asset.
