I start this blog post with a confession. I am a collector. I collect all sorts of things, vintage wristwatches, fountain pens, 1940’s Hall refrigerator ware, vinyl records, and probably a few other things I can’t think of right now. If you ask my wife, there are few collections I don’t count, like unread magazines and old running shoes. If one of something is good, ten is better and twenty is twice as good as ten. I don’t intend to get into my own psychoanalysis, but whatever a step or two removed from obsessive/compulsive disorder is, I have that bug.
And how do those of us with this “condition” meet the need to acquire items we do not really need, but have to have? For me it is flea markets, antique shops, and collector shows. I stay away from online auctions because that takes the fun of the hunt out of the equation. It’s a hobby, or a series of hobbies, and, considering that I do not spend that much money on these collections, relatively harmless. I am sure I spend less money per year on my collections than people who play a lot of golf, or collect and sample single malt scotches, the finest bourbons, or rare and collectable wine vintages.
Those of us whose hobby is collecting end up with tangible items at the end of the day, not just a score card and memories like the golfer. That is the tie-in to divorce. How do you value these collections?
The collection, like any other asset in a divorce, is subject to equitable distribution. The question is, what is the collection worth? This is an issue that comes up in divorces from time to time. In the divorce context, any item of personal property is worth whatever someone will give you for it right now, not what you paid for it. Basically, its fair market value. That’s why I tell people it is cheaper to buy a new couch than it is to fight over an old one. You may have paid $5,000.00 for that Ethan Allen sofa seven or eight years ago, but what you paid for it is not the question. It is what someone will give you for it right now. If that’s $500.00 through Craig’s List, that is what the sofa is worth for equitable distribution purposes.
Translating that to my collection example, what if someone has a record collection and paid an average of $10.00 per record? Say that person has about 2,000 records. Are the records worth $20,000.00 for equitable distribution purposes? I say no. The records, as a collection, are worth whatever someone will pay for the collection. The collector cannot be expected to take the albums, one at a time, to two or three dealers, and come back with a price for each and every record. The collector can, however, be expected to bring in two or three qualified dealers to place a value on the entire collection. Realize the dealer would have to transport the records, inventory and price them, and store them until they are sold and that could take years.
Related to that, the collector spent his or her weekend afternoons looking for the records, negotiating prices and bringing them home. Just like the golfer, the collector spent his or her time searching for and ultimately playing the records. Unlike the golfer, the collector has something to show for his or her time at the end of the weekend. In my mind, the collector should not be penalized for having a hobby with tangible results.
Getting to the specifics of valuation in the divorce context, in a case like this I would want an assessment of value from a dealer with some sort of credentials, like his or her own store, either brick and mortar or online for a significant period of time; someone who has a level of expertise in the field. The collector cannot walk into court and say some unnamed person will give him only $1,000.00 for his record collection. If I am on the other side in the divorce, I am going to want to find someone with the same credentials and have that person spend some time looking at the collection and pointing out the value of certain high points of the collection. I want someone with a level of expertise who has reviewed and thoroughly assessed the value of the collection to offer an appraisal of that collection.
I have run into problems with collectors who want to put their own value on their collection. I once represented a gentleman who restored vintage motorcycles. He would obsess over getting the restoration perfect. He would look for the perfect part, replacing one part he had for one that was even more authentic. One problem in his divorce was that he would spend way more on restoring the bikes than he could ever sell them for. In the divorce context, he would proudly tell anyone listening, like a hearing officer, how much he spent, not how much he could sell the bikes for. Compounding that, every so often he would advertise the bikes for sale for some pie-in-the-sky price to see if he could generate any interest. When the hearing officer valued the motorcycles for far above what the fair market value was, it was a big problem in his divorce.
So, in conclusion, that collection you or your spouse have accumulated over the course of the marriage does have a value for equitable distribution purposes. There are questions, however. First, what is the value? Second, something I do not have time to get into here, but does the value of the collection justify paying someone to value that collection?
Bottom line is that there may be value in something neither side thought had much value. I am happy to discuss any complex or esoteric valuation questions in the context of divorce.
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