Many people in Indiana are diversifying their portfolios by investing in one of the safest yet highly profitable areas of the market: art. Whether it’s a classic painting, an antique sculpture or even a modern piece of contemporary art, these collections often become highly valued investments. Unfortunately, divorce can complicate matters regarding ownership and division of such assets.
Divorce in Indiana
Indiana is one of the many states that use equitable distribution laws when dividing assets and debts during a high-asset divorce. This means the court will divide all marital property, including art collections, fairly between the two spouses — though this does not always mean an equal split. Regarding art collections, courts typically consider any prenuptial agreements or contracts outlining ownership rights and how you acquired the collection (i.e., whether you purchased it with separate funds or jointly).
The court will also consider any sentimental value attached to the artworks. For example, suppose one spouse inherited a painting from their grandmother. In that case, the judge may award them exclusive ownership of that particular artwork piece without compensating their former partner for its monetary worth.
The Internal Revenue Service (IRS) can also impact asset division regarding art collections. Depending upon the collection’s value, the IRS may consider it a capital asset and subject it to capital gains taxes if sold or transferred.
Divorcing spouses should also be aware that any artwork gifted from one partner to another during a marriage will remain marital property even after divorce. This means they are still subject to division according to equitable distribution laws, regardless of who originally gave them as gifts.
Although dividing assets during a divorce can be complex, it is important to understand the laws governing the art collection division in Indiana. The court will always try as much as possible to ensure everyone gets their fair share depending on the unique circumstances of the marriage and the individual contributions to the art collection.