Personal Use Assets or Personal Property

In divorce proceedings, personal use assets play a significant role in property division. These assets encompass items acquired for personal enjoyment, daily use, or lifestyle enhancement rather than for investment or business purposes. From household furnishings to vehicles, personal belongings to collectibles, these assets hold both financial and sentimental value for individuals undergoing divorce. Understanding how personal use assets are valued and addressed in divorce is an important aspect of the final resolutions.

What are Personal Use Assets?

Personal use assets encompass a wide range of items that are used for personal enjoyment, lifestyle enhancement, or household use. Think of personal use assets as everything that would fall out of your house if you could flip it upside down and shake it.  These personal use assets may or may not be titled.  For example, your car or boat is likely titled in one or both of your names. Other personal use assets, like furniture or clothes, don’t have any title they are just maintained in one or both of your possessions.

Here are some of the most common categories of personal use assets:

• Household Furnishings and Appliances: This category includes furniture, electronics, kitchen appliances, dishes, clothes, and other items used for daily living within the home.  It is a very broad category of assets with items that may vary greatly in cost.  
• Vehicles: Cars, motorcycles, boats, and recreational vehicles are in this category. These assets are often subject to valuation based on their fair market value at the time of divorce. These assets may have debts pledged against them, like an auto loan.
• Jewelry and Accessories:  Jewelry, watches, handbags, and accessories are considered personal use assets and may hold significant sentimental value for individuals.
• Collectibles and Memorabilia: Items such as artwork, antiques, sports memorabilia, and hobby collections are included in this category. Valuing these assets may require expertise in appraisals or market analysis.
• Pets: While pets are considered personal property under most laws, they are often treated with special consideration due to their emotional significance to one or both parties (and kids).
• Frequent Flier miles or Credit Card points: These are unique assets that are often categorized in with other personal use assets because they are intended for personal enjoyment.  Individuals sometimes have sentimental attachment to these types of benefits although they may not have substantial financial value.

Personal use assets are often acquired in various ways and over a long period of time.  Many were likely purchased new with income earned by one or both spouses. Other items may have been purchased used.  If the items were received as a gift, inherited or maintained from prior to marriage, they may be categorized as non-marital or separate property and kept out of the joint group of personal use assets to be addressed in divorce.

First: Gather the Facts

Valuing personal use assets involves assessing their fair market value, which is the price at which the asset would change hands between a willing buyer and a willing seller, both having reasonable knowledge of the relevant facts. Several methods may be employed to determine the value of these assets:

• Published Values: Resources like Kelley Blue Book (KBB) or National Automobile Dealers Association (NADA) may provide generally accepted values for cars and boats. You should make sure there is agreement on the inputs to the values, like the condition of these assets and whether you are using resale or trade-in values. Auto loans or other encumbrances pledged against these assets should be included to offset the value.  So it you have a car with a KBB value of $18,000 and a remaining $6,000 auto loan, the asset should be valued at $12,000.
• Agreement between Parties: In some cases, divorcing spouses may negotiate and agree upon the value of personal use assets based on their perceived worth or sentimental attachment.
• Comparable Sales: For assets with readily available market data, such as vehicles or certain collectibles, comparable sales data from similar transactions may be used to estimate their value. Researching values online in resale markets like Craigslist or neighborhood sites can be an easy way to value these items. The values should be in as-is condition as if they were being sold now in their current condition.
• Appraisal: Professional appraisers may be hired to assess the value of high-value items such as jewelry, artwork, or collectibles based on factors such as condition, rarity, and market demand. This can be an expensive option and take some time if both spouses agree on wanting a professional valuation.
• Miles & Points: Frequent flier miles and credit card points may have agreed-upon standard valuations that can be used in this process.  For example, many frequent flier miles have an agreed-upon $0.01 value so 30,000 points is worth $300. Credit card points also often have an assigned value based on the plan, such as 10,000 points can be used for a $100 certificate so you can calculate the value.  

To facilitate the valuation and division of personal use assets, it is important for both parties to provide full and accurate disclosure of all assets owned individually or jointly. Relevant documentation, such as purchase receipts, appraisals, and ownership records, should be gathered and shared during the divorce process.

Second: Understand the Law

Once the value of personal use assets is determined, they are typically addressed in the property division process in a number of ways.  First, non-marital or separate personal use assets are awarded to the original party.  So if you had personal use assets prior to the marriage or you inherited assets during the marriage, those assets would typically stay with you and not be included in the overall division.

For the marital/joint personal use assets, the larger value items like a car or piano are often added to the balance sheet and looked at in the overall division of all property.  The many other smaller personal use assets are typically either shared between the spouses or bought out with other assets. The simplest division of personal use assets is to sell them all and split the proceeds.  But this is typically unrealistic. Alternatively, the parties could work together to divide all property so they each end up with an equal value or an equitable division they can live with.  If the parties final agreement on personal use assets results in one party having a greater value than the other, they can offset that value with other marital/joint property.

Value is Resale Value

Keep in mind that the value of personal use assets in a divorce process is resale value.  It’s what an item would be worth today.  You may have bought your couch for $1,500 but it may only be worth $300 if sold in a garage sale today. The value for the divorce process would only be $300 but yet the spouse who is leaving the couch may need to spend $1,500 to buy a similar item.  This is an example of the division of personal use assets being more art than science.  If the parties can both feel as if they have equal value of personal use assets once divorced, then they can each supplement their household items as needed moving forward. In cases where personal use assets have significant sentimental value, parties may negotiate specific arrangements to accommodate emotional attachment while ensuring a fair distribution.

Frequent Flier Miles and Credit Card Points

For frequent flier miles and credit card points, many plans will allow parties to divide these benefits with a Court order.  This is the easiest way to divide these assets in a fair manner.  Alternatively, clients may buy-out these assets for an agreed upon value or agree that each will keep their own.

Pets

Pets are cherished members of the family, often providing companionship, comfort, and joy to their owners. However, when couples decide to divorce, determining the custody of pets can become a sensitive and challenging issue. Unlike children, courts do not make custody decisions based on the best interests of the pet. Instead, unless the parties agree otherwise, pets are typically treated as assets to be allocated to one spouse or the other. The costs of keeping a pet moving forward may need to be considered in a cash flow analysis.

Pet custody is a unique aspect of divorce that requires careful consideration and compassion. By prioritizing the well-being of their furry companions and working together to find amicable solutions, divorcing spouses can ensure that their pets continue to receive the love, care, and attention they deserve during and after the divorce process.  Ideally spouses can work out an agreement on a pet between them.  Without agreement, the spouse who primarily cared for the pet, including feeding, grooming, and veterinary care, and who will provide a stable and suitable living environment for the pet post-divorce may be more likely to receive custody, especially if they can demonstrate a strong bond with the animal.  If you are sharing a pet moving forward, make sure to understand the financial obligation, including food, medical care, and grooming.  Courts may consider the pet's well-being and quality of life when determining custody, including factors such as the availability of companionship, exercise, and attention.

Personal use assets represent more than just monetary value; they hold sentimental significance and reflect the lifestyle and preferences of individuals. When navigating divorce proceedings, understanding the valuation and division of personal use assets is crucial to achieving a fair and satisfactory outcome. By engaging in open communication, seeking professional guidance when necessary, and prioritizing cooperation, divorcing spouses can effectively address personal use assets and move forward with the next chapter of their lives.