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Even the most amicable divorces can become contentious during a split. As part of the divorce process, couples often have to contend with dividing any property or assets that were acquired during the marriage. Divorcing spouses have the ability to reach any agreement they desire on how to divide the property, but if no agreement is reached, that division is left to the trial judge. The division of property can be extremely complicated when it comes to non-traditional assets in a divorce.
How does the Court divide assets?
It is a common misconception that the Court attempts to divide marital property equally, or ‘50/50’ to each party. On the contrary, the standard for how the Court should divide property is not very specific. Generally, the Court distributes marital property in a “fair and equitable” manner, or so that the division is “just and right” as to each party.
It is important to note that the divorce court judge divides or apportions marital property, as contrasted with pre-marital or separate property.
Non-marital property can include the following:
- Assets or property acquired or held by a spouse prior to the marriage;
- Or property obtained during the marriage as a gift or through inheritance.
Divorce attorneys are skilled in knowing how the property will be divided. Even if you believe you and your spouse will have an amicable, consulting with an attorney will ensure that assets you acquired individually stay with you.
What property do I have to disclose as part of the divorce?
Rules pertaining to divorce cases require that the divorcing spouses disclose to each other, or their attorneys, a complete and accurate inventory of marital property, including a statement of the value of that property. Commonly in the divorce process, a problem that arises is when a spouse fails to disclose all marital property in their possession or control, either by innocent omission or by calculated concealment. This is why it is so important to have the advice and assistance of an attorney that is experienced in asset discovery and valuation. A divorcing party has an advantage if his or her attorney has education and experience in dividing non-traditional assets.
What are the different assets a Court considers?
Generally speaking, a couple’s assets can be categorized in the following ways:
- Traditional assets
- Non-traditional assets
What are traditional marital assets?
Traditional assets are what you believe are commonly held in a marriage, including bank, brokerage and retirement accounts, real estate, vehicles, precious metals (such as gold and silver), and jewelry. These traditional assets are characterized as having more easily ascertainable values.
What are non-traditional assets in a divorce?
Non-traditional or alternative investments have a definition that is ever-expanding.* In fact, during the days of the COVID-19 pandemic, the interest in non-traditional assets and collectibles exploded according to several media outlets such as Forbes, Money, and The Wall Street Journal.
Non-traditional assets may include anything such as the following examples:
- Non-fungible tokens (NFT’s)
- Collectible items
- Fine art
- And more
These types of assets present a challenge to a divorcing spouse and their attorney because the ownership of the asset can be easily concealed from the other spouse, or its value may be difficult to ascertain.
Odd collections may have significant value
All too often, a spouse may acquire or collect items for several years, while the other spouse has no understanding or knowledge of the value of the collection. A good example is a husband who collects sports memorabilia or player cards. The other spouse may consider this as merely a hobby or even a waste of time, but some collections of baseball cards, autographed footballs, and basketball jerseys actually worn in a game carry a significant value if the player has a successful career.
“Acquisitions of unique or odd collectibles is not confined to a particular gender,” said Board-Certified Family Law Attorney Steve Walden. “Purses (or handbags) by certain manufacturers, designer shoes, and fine china may have significant values that could escape the notice by the inexperienced or inattentive attorney and spouse.”
How will an attorney make sure I get what I’m entitled to in my divorce?
The first step in ensuring that a spouse gets their fair share of the marital estate is for the attorney to inquire fully into the other spouse’s hobbies, collections, and interests. The next step is to ensure that the other party and the attorney provide a full disclosure of assets by asking specifically for an inventory or appraisement of any collectible items such as firearms, artwork, rare coins, and sports memorabilia.
Divorce lawyers will begin assessing the information you provide about non-traditional assets in your divorce in the following ways:
Investigate financial records
A qualified and experienced divorce attorney does not rely on the opposing spouse to provide a full, accurate and complete inventory of that spouse’s assets. A thorough attorney requests, obtains, and investigates bank, credit card, PayPal, and other money transfer records for transactions that indicate purchases of non-traditional assets. For a more thorough investigation, the spouse and attorney with access to the opposing spouse’s social media accounts will look for posts regarding collecting activities, including boasts to other collectors about her recent acquisitions.
Discovery of hidden hobbies
Another method of discovering a “hidden” hobby or collecting activity of a spouse is attention to what catalogs, flyers, or other advertisements that frequently come in the mail. If the spouse receives a monthly catalog from a gun auction company, the chances are that the spouse has at least one collectible firearm. The same can be true of frequent fine art gallery mailers.
Thorough discovery requests
Complete discovery requests should ask whether the opposing spouse has a safe deposit box, storage units, or standard home safe. Individuals that own unique or valuable collectibles will purchase insurance policies to cover coin collections, comic books, rare sports memorabilia, or antique furniture. Investigation of these insurance policies will include schedules of important assets, with estimates of value provided by the policyholder spouse. This would be key evidence as to the indisputable value assigned by the spouse in possession of the item.
Assign value to assets
Once the divorcing spouse and attorney finally locate those potentially valuable items, the next step is to determine how much value to assign to the asset. Courts utilize “fair market value” of items to determine an equitable division. For example, stocks, precious metals, and vehicles are commonly traded and their values are easily found by looking at the price paid on the market on any given day.
However, for unique items such as rare coins, vintage comic books, designer fashion accessories, or sports cards, the best resource can be public auction results. For rare coins, this could include David Lawrence, Stacks Bowers, or Great Collections auctions.
For sports memorabilia and cards, it could be Pristine Auctions or even eBay. Antique and modern firearms can be purchased by auction or straight purchase through GunBroker.com auctions. Large auction houses such as Heritage, Sotheby’s, Christies, and Bonhams have sales of just about everything that is collectible or specialized. A search of each of these companies’ auction archives provides useable evidence of fair market value for even the most esoteric or unique item.
And finally, hiring a professional appraiser or dealer who is specialized in a particular type of asset may be the best, but most expensive, method to determine the value of a unique asset.
Divorce lawyers have the knowledge and experience to determine which method would be best in helping assign value to non-traditional assets in your divorce.
Allocation of the assets
The next step for the divorce attorney and divorcing spouse is to decide what to do with the non-traditional asset that has been discovered and valued. A spouse can request that the Court award them the asset, award its value in cash that is available through an account or by judgment, or may award other assets of equal value in exchange for the items.
Another option for the divorcing spouse, if he can show that the spouse acquiring non-traditional assets has wasted “marital money” on worthless items, is to have the Court “reconstitute” the marital unit for money squandered by the spending spouse. Simply put, this means that the spouse that did not spend the money gets property or assets equal in value or cash equivalent in the division of property and the spending spouse is awarded the amount of her waste as if it were an asset.
Board Certified Family Law Attorneys Who Can Help
Every divorce is different because every divorce involves different types and amounts of property and assets that have to be divided and apportioned to the spouses. A divorcing spouse has a clear advantage if her or his attorney is aware of how to recognize and locate non-traditional assets, assign value to the property, and use it to the advantage of the represented spouse. Our family lawyers are ready to help you advocate for what is just and fair in the allocation of non-traditional assets in your divorce.
The Carlson Law Firm handles family law cases in Bastrop, Bell, Burnett, Coryell, Hays, Lampasas, Travis, and Williamson counties. Our attorneys will advocate for you every step of the way. Contact The Carlson Law Firm for a free discreet consultation today.
*Postscript – note that the description of potentially valuable non-traditional assets is constantly expanding and is without limit. Although not discussed above, one could easily include items such as pocket knives, Disney memorabilia, movie posters, Star Wars toys, vintage video games, vintage Nike shoes, antique tools, etc., etc.