Art, jewelry, and antiques are often among the most sought-after illiquid assets in divorce cases.
These valuable possessions hold sentimental and financial significance for couples, making it even more challenging to reach a fair agreement on their division.
The intricacies lie in properly assessing the value of these assets and determining an equitable distribution, which demands a comprehensive understanding of their worth and the couple’s unique circumstances. That is why knowing how to navigate the complexities of valuing and dividing illiquid assets is crucial in ensuring a just outcome in any divorce settlement.
How to Navigate the Complexities of Valuing and Dividing Illiquid Assets
The first step to properly valuing and dividing illiquid assets during a divorce is to get an appraisal. Hiring a certified appraiser who has expertise in the specific type of asset you are seeking to divide is crucial. This professional not only determines the fair value of the asset but also offers valuable insight into the most appropriate way to split it between both parties. Their expertise ensures that the division is fair and equitable, taking into account any unique characteristics or considerations related to the asset. By obtaining a comprehensive appraisal, you can establish a solid foundation for the asset division process, promoting a smoother and more amicable resolution.
It’s also important to consider the cost of splitting an asset. In some cases, it may not be feasible or possible to actually split the asset itself and each party will have to take into account any additional costs associated with dividing it. For example, if you’re looking to divide a piece of art that cannot be physically divided, then you’ll need to factor in the cost of having two identical replicas made.
Additionally, both parties should carefully consider the tax implications that may arise when dividing illiquid assets. In many cases, there may be a capital gains tax obligation that needs to be fulfilled in order to facilitate the fair division of the asset between each party. It is highly advisable to consult with a knowledgeable accountant or financial advisor to ensure a comprehensive understanding of the specific taxes that may need to be paid and how these taxes could potentially impact the overall distribution of the asset. By seeking professional guidance, you can navigate this aspect of asset division with clarity and confidence.
When it comes to dividing illiquid assets such as art, jewelry, and antiques, couples must look beyond just their own opinion on how they should be divided. It’s important for both parties to consider all of the factors including appraisal value, cost associated with splitting an asset, and any tax implications that may come into play.
By working together and speaking to a financial advisor, couples can ensure that the division of their illiquid assets is fair and equitable for both parties.
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If you have more questions about asset division in divorce, our team is here to help you every step of the way. At Purposeful Wealth Advisors, we work closely with divorce attorneys, accountants, and other dedicated professionals to arrive at comprehensive solutions for our clients.
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The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Purposeful Wealth Advisors and not necessarily those of Raymond James. Neither Raymond James Financial Services nor any Raymond James Financial Advisor renders advice on tax issues, these matters should be discussed with the appropriate professional.