Roughly five out of every 1,000 people experienced a divorce in 2021, according to the Centers for Disease Control and Prevention (CDC). A key part of the divorce process involves the separation of previously shared property. The property divorcing spouses have accumulated over the course of their lives may include valuable collectibles, such as art collections and antiques, depending on the date of their acquisition. Read about the valuation of collectibles in a divorce and find out how a Tennessee divorce attorney from Shepherd and Long, PC can assist divorcing couples by calling 865-383-3118 to schedule your free initial consultation.
Understanding Divorce
The American Bar Association (ABA) describes divorce as the legal process culminating in a court-issued decree that officially terminates a marriage, allowing each party to remarry. During divorce proceedings, the court may make vital decisions, such as awarding custody of children and deciding how to split the couple’s assets between them. Since state laws govern divorce, the exact procedure varies depending on where the couple file for divorce.
Overview of Tennessee Divorce Laws
Section 36-4-101 of the Tennessee Code outlines the divorce laws in this state. Here are some of the key points concerning them:
- Residency conditions: If the spouse committed the acts leading to the divorce while the person filing for divorce in Tennessee lived there, there are no residency requirements. Additionally, residency is unnecessary if the grounds for divorce originated from activities that occurred in another state and one of the spouses has lived in Tennessee for at least six months.
- Acceptable no-fault divorces: In Tennessee, there are two acceptable reasons for obtaining a no-fault divorce, defined as a divorce in which it is unnecessary to demonstrate wrongdoing by the other party. The first of these reasons is a determination (by the spouses) of irreconcilable differences. The second is a separation of at least two years, provided the couple has no children.
- Other divorce reasons: Tennessee law also allows spouses to divorce for cause. Examples of reasons commonly cited as grounds for a for-cause divorce in Tennessee are adultery, violence or cruelty, desertion, substance or alcohol addiction, becoming pregnant by someone other than one’s spouse, impotency, criminal conviction, not providing financially despite having the means to do so, and unresolved former marriages.
Valuation of Collectibles Explained
If one spouse owned all of the collectibles before their marriage, then the collection typically reverts to that spouse during the divorce rather than being divided between the spouses. This convenient scenario makes valuation unnecessary. That said, collectibles acquired after the marriage date might be subject to division between the spouses. In these cases, it is necessary to perform a valuation of the collections in question to ensure an equitable split.
Examples of collectibles often subject to division during divorce include:
- Coin, letter, and stamp collections
- Decorative plates and ceramics
- Sports collectibles
- Figurines
- Movie props
- Wine
- Other rare or unique items
Methods of Dividing Collectibles During Divorce
When dividing collectibles, divorcing couples may opt to:
- sell the items and divide the sale proceeds
- split the collection
- trade one collection for another (this works best when the spouses have shared more than one collection)
- reach financial parity by a “buy out” arrangement in which one spouse purchases the other’s share in the collection
Find out more about the valuation of collectibles in a divorce and learn how a seasoned Tennessee divorce attorney can help those navigating the divorce process by scheduling a consultation with Shepherd and Long, PC.
How Are Assets Calculated in a Divorce?
Generally, collections owned prior to the marriage are separate property, which is not subject to division between both spouses during divorce proceedings. However, one commonly cited reason for curating collectibles is the expectation that the items in the collection will appreciate or increase in value over time. If a collection increases in value during the marriage, the court might consider the appreciated collection to be community property and divide the assets between the couple. For this reason, it is useful to know how to calculate a collection’s current value, which soon-to-be divorcees can achieve in the following way:
- Consider insurance: Start by checking whether any current insurance policies state the collection’s value. If the collection is already insured, the coverage of the policy may serve as an indicator of the collection’s overall value. If the collection is not insured or if it was previously deemed ineligible for an insurance policy for any reason, then its value may be less predictable. Worth noting is that the insurance value typically considers replacement instead of market value.
- Hire an appraiser: Consulting with a certified appraiser specializing in specific collections can give individuals an idea of a collection’s value by determining its cost, quality, and recent comparable collection sales.
- Research available purchasers: If there are multiple potential buyers available for the collection, it is likely to have a higher market value.
- Think about taxes: The sale of collections is usually subject to certain taxes. For instance, if an individual holds a collection for at least a year, they may need to pay a special form of capital gains tax.
- Remember volatility: Since the value of a collection can sometimes rise and fall quite quickly, it might be worthwhile to get an initial valuation soon after filing and then obtain a second toward the end of the divorce process. When discussing how to fairly split a collection with a spouse, one option is to rely on only the second valuation; another is to use an average of the two assessments.
How Is Wealth Distributed After Divorce?
In the community property states of Arizona, Idaho, Nevada, Louisiana, Texas, New Mexico, Wisconsin, California, and Washington, divorce courts consider both parties as equal owners of all marital assets. As a result, these states split marital assets equally as part of the divorce process. However, all the other states adopt the equitable distribution principle when splitting marital property and debts. Crucially, while the court tries to do this fairly, the result might not necessarily be an equal split.
Due to the numerous factors involved that may influence a court’s decision concerning the distribution of wealth after a divorce, it can be very challenging to predict the outcome. The stress sometimes occasioned by this degree of uncertainty helps to explain why many divorcing couples opt to settle outside of court. Here are examples of the factors the court may consider regarding asset distribution during divorce proceedings:
- Marriage length
- Each spouse’s age and health (both emotional and physical)
- Each spouse’s financial situation after separation
- The income or property contributed by each spouse to the marriage
- The couple’s standard of living throughout the marriage
- Each spouse’s earning potential
- Both spouse’s contribution to the other’s earning power, training, or education
- The custodial parent’s requirements for the maintenance of the children’s lifestyle
Contact a Tennessee Divorce Attorney Today
Dividing property is often a contentious issue. Apportioning collectibles may be especially fraught when it concerns splitting up collections that hold sentimental as well as financial value. Consider getting in touch with a seasoned Tennessee divorce attorney to help fight for your rights and negotiate asset division during divorce proceedings. Gain a more comprehensive understanding of the valuation of collectibles and see how Shepherd and Long, PC can aid individuals going through a divorce by contacting our office today at 865-383-3118.