People can collect anything, and they often choose unique, rare or unusual objects on which to focus their time, energy and money. Nostalgia, obsession, investment, knowledge – the thrill of the hunt – whatever the reason for pursuit of a particular type of object, the existence of a collection can lead to value and ownership disputes in divorce.
Two issues often cause conflict in a divorce involving a collection. First, people often associate their collections with family, nostalgia or personal passions. These associations may be highly personal to the spouse who built the collection and in divorce, that spouse may feel strongly that the collection should stay together under their ownership. They reason, why would the other litigant want something so personal or sentimental to the other. Unfortunately, sometimes resentment and spite can motivate the other litigant to take a position that distresses the other spouse.
Because in Connecticut the court may redistribute property that belongs to one litigant solely (there is no concept of separate property), there is no guaranty that even if a litigant amassed their collection completely before the marriage that it will remain with that spouse after the property division.
The second significant issue is valuation. The more obscure the collected objects, the harder it can be to place a fair value on the collection for purposes of equitable division of property in divorce. There may be no record of any comparable sales or acquisitions. Of course, the more valuable a collection, the more likely that it becomes an issue in court because the less-attached spouse may not be willing to concede ownership or stipulate as to value.
How does a Connecticut court assign value to an asset?
We previously published a post about valuation of fine art in this context. As we explained, the court has considerable discretion to choose a valuation method for an asset in a divorce trial and the litigants may advocate for their preferred methods. The judge must correctly apply the valuation method they choose and do so without obvious errors. The court may also create a hybrid approach in which it adopts certain aspects of one appraiser’s valuation method but tweaks it to better evaluate the particular assets or based on other evidence. For example, an appraisal done for insurance purposes may be more relevant than one done in anticipation of divorce. See 7 Connecticut Practice Series, Family Law and Practice sec. 27:7.
The court is free to consider these types of evidence bearing on valuation:
- Litigant-supplied evidence, including appraisals, other expert opinions, appraisals done for insurance or loans, and additional documentation (e.g., information from auction houses, books, associations and clubs, newsletters, journals and magazines)
- Spousal opinions about the collection’s value (the “owner” may testify about value of the collection, so it may depend on if it belonged to one spouse historically or if both managed it together)
- Judge’s own knowledge
How can a litigant prove the worth of a unique collection?
In short, presenting strong and detailed evidence about the nature and value of the objects collected as well as their value as a collection is crucial. Our state Supreme Court has said that if a litigant fails to present evidence of an asset’s valuation, they may not later challenge the judge’s valuation decision. Bornemann v. Bornemann, 245 Conn. 508 (1998). So, the litigant’s counsel should put the court on notice that they intend to present valuation evidence.
Failure to establish valuation may result in the court ordering the collection sold and the proceeds split, which may not be what the litigant wanted. In one case, valuation evidence was scant, so the judge was creative. The court only had one litigant’s opinion that a “Cat’s Meow” collection of wooden village buildings started together during marriage was worth $10,000. The parties presented no valuation evidence of stamp and coin collections the husband started before marriage but expanded with marital funds. The court ordered the litigants to divide the collections by agreement or attempt mediation to resolve it. If they did not reach agreement, they were to sell the collections, dividing the proceeds equally. Farrington v. Farrington, 2010 WL 5188441 (unpublished 2010).
Bornemann states that while the judge must consider the overall economic value of assets, they do not need to assign specific values. However, in high-net-worth divorces, it makes sense and is more equitable to ask the court to assign values before dividing the property. For example, giving the collection of antique British ambulances to one spouse and that of presidential memorabilia to the other without knowing the value of each collection could result in economic unfairness.
If the collection holds considerable worth, a litigant should engage an expert appraiser to investigate the value, review the collection in detail, draft a written report and potentially testify at the divorce trial. (The fine art blog discusses qualities and skills to look for in an expert appraiser.) For very obscure objects, experts may be scarce, and time may be of the essence in locating them. For example, there are likely only a couple of experts in the whole country who can appraise antique cash registers, according to Barth Goldberg in Valuation of Divorce Assets.
Other relevant evidence of value may include fair market value, comparable sales, market reports, prior valuations, purchase price and other factors. Specialized companies professionally authenticate and grade certain kinds of collected items such as sports or gaming cards.
Things to consider
A divorce litigant in this position should work closely with a knowledgeable family lawyer to identify the person’s goals for a collection. Is there a strong sentimental connection? Does the collection have substantial worth? Does the sentiment override the investment aspect of the collection or vice versa? Honest answers to these questions will allow the attorney to strategize with their client to determine a strong approach to this aspect of property distribution in trial.
