Dividing a Wine Collection in a Colorado Divorce

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One of the most stressful aspects of divorce for many people is the threat of potentially losing half or more of their assets. This anxiety may be heightened when you have amassed a priceless collection during your marriage, such as a collection of fine wines, collected from all over the world. When this was a joint venture between you and your spouse this can further complicate things, but in this article, our Colorado property division lawyers at Halligan LLC will try to simplify it as much as possible.

How is Property Divided in Colorado?

Many people believe that when you get divorced all property must be divided 50-50, however, that is only the case in a handful of states. In Colorado, courts apply an equitable distribution standard. This means that the judge will consider a broad range of factors in determining what a fair division of the assets would be. This could be more or less than a 50-50 split, depending on the circumstances.

It’s important to understand that a judge only gets to decide how property is divided in the event that the married parties cannot come to an agreement on their own. The parties may use mediation, arbitration, or negotiation with the help of their attorneys to determine how their own property is divided and what they believe is a fair division of marital assets and liabilities. Another consideration is whether the parties have a prenuptial or postnuptial agreement. If the parties have an enforceable agreement that dictates the classification or distribution of assets, that agreement will control and the court will simply enforce it.

Is a Wine Collection Marital Property?

When it comes to equitable distribution, the most important step is the classification of assets. This is because only assets classified as marital property can be divided between spouses. The court does not have jurisdiction over the “separate property” of each spouse, which typically includes property acquired before the marriage (except to the extent the property has increased in value), property acquired via gift or inheritance (that is not commingled), and property excluded via a valid marital agreement.

Wine may be separate or marital property depending on the circumstances. For instance, wine acquired by either spouse prior to the marriage may be treated as separate property, except to the extent the wine has appreciated in value. Additionally, wine gifted to either spouse by a third party during the marriage may also be classified as separate property. Wine received through inheritance by one of the spouses may also be separate property. On the other hand, wine gifted between the spouses or purchased by either spouse during the marriage may be treated as marital property and will be subject to equitable distribution.

How is Wine Divided in a Divorce?

Once you have determined which wine is marital property, you will have to determine how to allocate it. There are a number of ways to do this, but all require an accurate assessment of the value of the wine. At this stage, it will be important to bring in an appraiser, especially if you have rare wines that may be difficult to value. Once the parties (or the court) have settled on a value of the wine collection as well as all other assets subject to equitable distribution, the parties may utilize any of the following:

One spouse can buy the collection from the other.

Once the value of the wine collection is determined, one spouse may choose to buy the other spouse’s share in the collection.

Trade an asset of equal value.

During the equitable distribution process, spouses will negotiate which assets to keep or trade to arrive at the equitable allocation of ownership and assets. If one spouse wishes to keep the wine collection, they may offer the other spouse an asset of equivalent value. For instance, if the wine collection is valued at $60,000, the spouse who wishes to keep it may offer to let the other spouse keep art or other valuables that are worth approximately the same amount.

Liquidate the collection and split the value.

Another option is to auction off or sell the wine collection and split the profits between the two spouses in whatever proportion is decided on. If you choose this route, it’s important to consider the impact that capital gains taxes could have on your earnings, as they may be as much as 28%. This is one reason why it is always a good idea to consult with an accountant when determining an equitable allocation of assets and liabilities.

Considerations

If you are not yet married or if you have not yet filed for divorce and are not contemplating doing so, it is worth considering a pre or postnuptial agreement that covers the treatment and valuation of wine in the event of a divorce. It may also be a good idea to have an appraiser assign value to the wines and agree to those values at the time of the signing. If you are considering divorce, you should consult with a divorce attorney to get an idea of what steps would be involved in moving forward with a divorce, what your options are, and what precautions you may want to take if any.

Contact Halligan LLC in Denver, Colorado

If you are considering divorce in Colorado and you have valuable assets that you want to protect, it’s important to consult with an experienced divorce attorney as early on in the process as possible. Contact the seasoned Colorado divorce attorneys at Halligan LLC today to schedule your consultation.

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