Dividing Collectibles in a Divorce: Everything You Need to Know
The IRS maintains a list of items that qualify as collectibles: items of value that are sought after and purchased by enthusiasts. They could be almost anything: Art, antique furniture, jewelry and gemstones, metal/coins, and even stamps are all considered collectibles, as are literary works, movies, and sports memorabilia. Even rare alcohols might be deemed collectible items.
Should you be going through a divorce, however, you and your spouse will likely have to determine how to divide up the ownership of your collectibles as part of the equitable division of your assets.
As it can be tricky to determine whether such items are considered marital property, here’s what you need to know:
Whether items are seen as marital assets could come down to a matter of timing. Anything acquired during the marriage will most likely be deemed a marital asset and subject to division during a divorce as a result.
Who receives what will also depend on a range of factors. Remember, the division of assets is equitable, not equal, so a judge may consider the length of the marriage and the contributions of both spouses. The reason for dissolving the marriage may also come into play, even though Michigan is a no-fault divorce state.
Additionally, a judge may also consider whether one spouse has some kind of emotional connection to certain items, such as family heirlooms. In contentious situations where both parties want certain items, the judge could order that they be sold so spouses can split the proceeds.
Separate vs. Commingled Assets
You may assume any assets acquired during marriage are automatically labeled as marital property, but that isn’t always the case. Similarly, assets acquired before marriage are not always considered separate.
With regard to collectibles, it works as follows: If one party acquires a collectible before the marriage, it is generally considered separate and thus the sole property of the purchaser; however, that assumes that assets aren’t somehow commingled.
If, for example, one party owns antique jewelry and gifts it to their spouse, they cannot reclaim it during a divorce. In fact, gifting it would make the jewelry the sole property of the recipient, meaning it wouldn’t be considered marital property to be included in the division of assets at all.
Additionally, any inheritance received by one spouse during the marriage, which can include collectible items, is considered separate, but again, that is only true until the property is shared or gifted to the other spouse.
The caveat lies in whether the property is somehow improved during marriage. If, for example, the other spouse contributes to the restoration of an antique collectible that, in turn, increases its value, there is an argument for that item being divided in a divorce, or at least dividing the increased value.
Separating one household into two is never an easy process, and sorting out which assets are marital and which are separate can be complicated. If you need legal guidance and support during your divorce, contact the experienced professionals at Gucciardo Family Law now to schedule a free consultation.
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