The potential pitfall of asset division in a divorce

The potential pitfall of asset division in a divorce

In a society where most long for human interaction, companionship and contact, marriage seems like a good option to flourish, grow together and to foster a harmonious relationship. But, marital bliss is not always possible and differences can occur resulting in divorce. Consequently, divorcing parties face challenges with, if any, children, support, visitation and division of property and assets.

Michigan residents in high asset divorces may find that it is not always easy or obvious on how to divide up items such as art collections, antiques and collectibles of values. Generally, such collections are referred to as non-income producing assets that may have increased in value but their value is not immediately apparent. In a recent divorce involving a retired Microsoft manager and his philanthropist wife, they could not agree on the proper division of their nearly $102 million art collection. Since there was no prenuptial, the decision on the proper division was left up to the judge who asked both sides what they wanted, why and used that information to divide the collection.

If divorcing parties are agreeable, the sale and equal distribution of the proceeds is the best and easiest solution. However, depending on what is in the collection, the parties must agree to the value of the items. If they cannot agree, it is best to involve a neutral valuation expert. However, in this economy, it is possible that there would be no buyers for the collection or that the items simply cannot be sold. In that case, the court would decide what to do.

Property division laws vary from state to state but generally it is divided up either under community property where in all property accumulated during marriage is divided up equally and assets accumulated before marriage are kept separate or under an equitable distribution system.

Michigan follows the equitable distribution system meaning that a judge decides what is most equitable and fair for the parties. Thus, it is possible for one spouse to get two-thirds while the other gets one-third. Gifts are considered separate and not community property. However, in bitter and contentious divorces any evidence supporting that an alleged gift is indeed a gift will help a court decide.

Divorces are never easy but parties can make it easier for themselves by agreeing on what to do with collectibles and antiques accumulated during the marriage.

Source: Business Insider, “How to Divvy Up The Goods In a Nasty Divorce,” Michele Bowman, Aug. 15, 2012

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