Couples who are going through a divorce are required to make a full disclosure of their financial assets to facilitate the division of their marital property. For affluent couples, this process can be extensive and so detailed that the parties start suffering from inventory fatigue. When that type of exhaustion sets in, one party or the other can simply wave whole groups of assets into the other spouse’s “separate property” pile, surrendering their right to a fair share.
A question might arise, for example, about a husband’s vinyl album collection, and the wife, out of habit, might simply say, “Oh, that’s his stuff,” acknowledging his emotional connection to those items, but overlooking the fact that he built the collection with marital funds, making it every bit hers as his. The thought of assessing the value of the collection and either dividing it or selling it and tossing the proceeds into the marital pot could strike her as too much of a hassle or too demanding on her part.
This may seem amicable or cooperative, which can help the process move more quickly. However, the spouse who doesn’t assert a right to a portion of shared assets can come away with far less than an equitable distribution of their property.
There is also the problem of property that neither spouse recognizes as property, or deems important enough to report or pursue. Many couples have substantial wealth tied up in easily overlooked items. If these items aren’t included in the equitable distribution process, they simply stay with the possessor to the determinant of the other spouse.
Below is a list of the types of assets that parties to divorce often overlook, because they don’t realize they can and should be reported and divided. This is not all-inclusive, just an array of items as examples.
- Benefits from past employers — If one party has a 401(k) from an old job, but hasn’t rolled it over into the 401(k) with the current employer, this old account could slip the minds of both parties.
- Cemetery plots — If earlier in your marriage, you took “’Til death do us part” seriously enough to invest in some real estate, you’ve got a pricey marital asset on your hands.
- Collectibles — Whether you share your spouse’s interest in building up a collection of sports memorabilia, stamps, coins, fine art, or whatever, it’s highly likely you have an equitable claim to a portion of its value. Don’t be dismissive of “nerdy” collections. Toys, action figures, bubble gum cards, and kitschy art featuring sad, big-eyed girls holding oversized daisies have been known to fetch small fortunes. It is important to assess the value of individual items and the collection as a whole.
- Country Club memberships and season tickets — Membership in any exclusive organization comes with steep upfront costs and annual fees. If these have been paid with marital funds, the membership is a marital asset and must be part of your property division. If one spouse is a sports fan, you might have season tickets to your favorite team. You might think little of this, since the season doesn’t last forever, and next year will be your spouse’s worry. However, many season ticket subscriptions are attached to expensive personal seat licenses that grant the right to purchase seats for the assigned locations. That license is an enduring asset, and if it was purchased with marital funds, the spouse who doesn’t use it deserves compensation.
- Digital assets — From Bitcoin to downloaded movies and music to e-books and NFTs, you might have substantial wealth tied up in digital assets. Some such assets can be duplicated, but those that cannot must be valued and distributed as part of the marital estate. Social media accounts might also have value, especially those with some nexus with a business asset. Gamers might value assets they’ve built up in a fictional universe. Of course, digital assets are tied to social trends and are, therefore, volatile, so arriving at an accurate and stable valuation can be challenging.
- Favorable tax treatment — If you get divorced sometime around April 15, Uncle Sam’s check might still be in the mail. It’s important to remember that both parties have a stake in the refund. And deeper tax issues might work in your favor, such as a capital loss carryover, which might reduce your tax liability for a few consecutive years. Each party has a right to share in this benefit if the losses occurred during the marriage.
- Intellectual property — You wrote a novel or screenplay during your marriage but went nowhere. Then, after your divorce, you get a review that launches you onto The New York Times Best Seller List, and Hollywood wants to produce a miniseries. Or maybe you’ve been keeping a blog on a topic that suddenly becomes popular, your traffic increases, and you’re finally able to monetize your content. How you handled your copyright during your divorce will dictate whether you must share these earnings with your ex. Intellectual property also includes trademarks, patents, and trade secrets. These are important business assets that could increase in value if a startup enterprise ever takes off. If you’ve made a material contribution to your spouse’s startup business, that company’s IP could be considered a marital asset.
- Loyalty program rewards — Credit card miles, frequent flyer miles, hotel points, and other rewards that businesses issue to loyal customers have readily quantifiable value. The accounts that hold the rewards are often in one spouse's name, but the rewards still qualify as marital assets.
- Money owed to you — If you’ve made personal loans to friends or relatives from your marital estate, those IOUs constitute marital property. You must decide how to handle the funds when and if those loans get repaid.
- Pets — This can be as emotional as it is financial. If you paid a great deal for a pedigreed animal for which you feel no attachment, let your spouse keep the pet in exchange for another valuable asset you want to keep. But when both parties are emotionally attached to their pet, whether it’s a thoroughbred racehorse or a rescue mutt from the local pound, the argument is over custody and visitation, not ownership.
- Spousal gifts during the marriage — A gift from one spouse to another given during the marriage is considered part of the marital estate, not separate property.
When it comes to the division of your marital property, it’s vitally important to be thorough because you never know where you’re going to find value. For example, in August 2022, a mint-condition Mickey Mantle baseball card sold for a record-breaking $12.6 million. Also, in 2022, an Action comics Superman #1 sold for an estimated $5.3 million in a private auction. This is not to say that every collection has a specimen of auction quality. But you want to be sure you’re not ignoring potentially valuable property. You don’t want to be the spouse who says, “Ugh, I hate that painting,” and six months later, spit your coffee, reading the six-figure headline from a sale at Sotheby’s.
To ensure you get the most from the equitable distribution of your marital property, you have to consult with an experienced attorney who knows what questions to ask, how to ensure total transparency, and how to conduct a thorough inventory of the marital assets you’re entitled to share.