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Disputes in high asset divorces can leave orphan properties

Arizona is a community property state. That means property bought during a marriage from a couple's incomes is generally divided equally between the individuals when they separate. But property division issues have a way of getting complex when creative legal tactics are used to make purchases. This can be especially true in high asset divorces.

Special circumstances require the help of an attorney. Without it, property can actually become a sad casualty of a divorce. Exhibit A for what we mean is the divorce of billionaire Dmitry Rybolovlev from his wife, Elena Rybolovleva. Two very high end properties in some of the most expensive areas of the country stand untouched, in part because of the way they were purchased. One is a former Trump mansion in Palm Beach, Florida. The other is a penthouse on Central Park West in Manhattan.

A trust tied to Rybolovlev and his 22-year-old daughter, Ekaterina, bought the two properties over the past four years at a cost of more than $180 million. An attorney for the Russian mogul says the 6700-square-foot New York apartment, empty now, is due to get some spiffing up ahead of the daughter living there while she finishes up her college education at Harvard.

The attorney says the Florida home, with its 475 feet of Atlantic beachfront, is "unlivable." She also says the trustees overseeing the place have opted to let it stay that way while Rybolovlev's estranged wife mounts a legal claim for that property and the New York apartment as part of her divorce.

Rybolovleva's argument is that she has a right to the properties because the purchasing trusts, naming her two daughters as sole beneficiaries, were created without her being informed. Her attorney calls the move "a scam" to prevent the properties from being subject to a Swiss divorce court's order freezing Rybolovlev's assets.

Rybolovlev's lawyer says the trusts were appropriate moves under succession planning.

Ultimately, the fate of these homes, and apparently a number of others in locations all over the globe, will likely have to be sorted out through the courts in Switzerland. The two sides don't show any indications of being willing to work toward a settlement on their own. Legal observers say that at the current speed of the proceedings, it could be seven more years before resolution is achieved.

Source: The New York Times, "Divorce, Oligarch Style," Alexi Barrionuevo, April 5, 2012

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