It’s been in the news lately.  Recently there was a new “pop-up” store in Beverly Hills.  You can even host a similar event in your city.  As stated on their website, “The Divorceé Sale™ was created by Jill Alexander who saw a need to help newly single friends discard their fashionable baggage from their previous life. These items serve as symbolic reminders of what is holding people back from closing a chapter of their past and moving on with their future. Jill also wanted to help her friends and other women fight cancer and is committed to donating a percentage of sale proceeds to charity.”

It’s Good to Start Over

I love the idea of minimizing and starting over.  That is what divorce does for people, once they get through the emotional roller coaster of the break-up and the legal proceedings.  The Divorceé Sale™ assists women in selling their designer fashions to rid themselves of the symbols of their past life and to provide them with some money while donating to charity.  This sounds like a win-win.

Is It a Business?

Then I started to think about a case I was involved with years ago where my client (the wife) used to purchase designer clothes at a discount retailer and then actually mark them up and sell them on Ebay.  The husband argued that she was making a living this way and should be charged with an income for support purposes, that being the difference between her purchase price at the discount retailer and the sale on Ebay.  Brilliant!  In this case, however, he could not prove she was doing this as a business. Rather, the explanation was that she made purchases and simply changed her mind after the return policy period expired at the store from where she made the purchase.

When I heard about The Divorceé Sale™, I started to wonder if the wife (let’s call her “The Divorceé” for this post), who sells her wares, can be charged with an income which would impact the support determination in the divorce or impact the determination of attorney’s fees (i.e., she now has funds to pay for her own legal counsel).  Rest assured, there is no specific case law on this, but solid arguments can be made, both helpful and harmful to The Divorceé.

Attorney’s Fees

If the liquidation of the wife’s designer closet starts during the divorce proceeding, the husband is going to have a strong argument that she has access to pay for, or contribute toward, her own attorney’s fees.  This newly created source of funds is relevant to the issue of attorney’s fees because the court must consider whether or not a party has the need for financial assistance from the other party.  If The Divorceé generates significant funds from her designer wardrobe, she may be faced with using that money to pay for her lawyer.   As the saying goes, timing is everything.

Child and Spousal Support

It is unlikely the capital raised by selling off a closet of goods is going to impact support because the funds paid to The Divorceé are not “income” as defined by the IRS and therefore likely are not “income” as defined by the laws governing support in California.  Further, The Divorceé’s wardrobe will no doubt be awarded to her in the divorce and once that is done, the liquidation of such an asset is not a reason to reduce or terminate support.

Go Forth and Prosper

So, as it turns out, The Divorceé Sale™ does result in a win-win…if the timing is right.