Dividing Personal Property- Collections

Englewood Divorce Lawyer

france-1289073Dividing Personal Property after a Divorce: Collections

When an attorney creates a list of assets of the marital estate, collections are considered high-risk items. Collections such as stamps, coins, precious metals, art, ceramics and precious metals have a high number of variables when it comes to valuation. Because of these variables, it is possible for the items of a collection to be extremely valuable.

Valuing Collections

When valuing collections, the main factors to consider are the condition of the pieces and their demand. Items that are currently popular or those that are historically highly collectible tend to have higher values than those that are not. For example, a number of years ago, Beanie Babies were highly collectible and in high demand. Individual Beanie Babies were selling for hundreds of dollars, depending on their perceived scarcity. Though they are still considered collectible, the demand for Beanie Babies has waned, affecting their value.

Fair Market vs. Purchase Price

Another risk for valuing collections is the confusion between an item’s purchase price and its fair market value. Some collections that cost hundreds or thousands of dollars to amass may have little or no value on the open market. A common example of such a situation is collector plates sold on a subscription basis. In this example, a subscriber to a club or website receives a new plate every two or three months at a cost of $50.00 each plate. The amount paid for these plates would no doubt lead the subscribers to believe that the plates were gaining or at least retaining their value. The truth, however, is that the value of the collection and other similar collections tend to decline as production of identical plates increases significantly.

Emotional Risks

The relative worthlessness of a collection may easily become an emotional issue during the course of a divorce settlement agreement. Using the collector’s plates as an example, assume that a wife spent $12,000 amassing collector plates over a number of years. During her divorce, the valuation procedures, generally a professional appraisal, revealed that the value of the collection was insufficient to cover the cost of delivering it to any purchaser. Since the wife spent $12,000 on the collection, the husband may claim that this amount should be included on the wife’s side of the marital estate during property division negotiations. Upset over the relative worthlessness of her collection, the wife may take every opportunity to attack her husband regarding every single purchase he ever made during their marriage. The wife may also challenge item values proposed by her husband.

But couples in situations like this need to understand that the standard of value that is used in divorce is the fair market value of the item. Meaning, the purchase price of the plates in this example, or any other item is irrelevant. For divorcing couples, it is important to understand that not every investment is successful. People can lose money on their collections even when their intentions are the best and markets appear strong at the time of purchase.

Contact An Englewood Divorce Lawyer

Property Distribution can take its toll on the parties involved in the divorce. Someone’s personal possessions in a divorce, especially collections, can have a serious emotional cost. Contact a knowledgeable Englewood Divorce Lawyer at the Radol Law Firm to discuss the valuation of collections as well as other issues of divorce.