Tangible property is anything you can touch, including vehicles, houses and family photos. In a divorce, all tangible property that is part of the marital estate is subject to division during a divorce. Dividing up tangible property acquired during years of marriage can intensify emotional stress and drive up legal fees. Deciding what to do with the family home can be difficult, but it is easy to put a dollar value on it by having it appraised. Deciding who gets to keep sentimental items that might not be worth a lot of money can sometimes be more difficult.
The marital estate includes everything that has been acquired during the marriage, including tangible property. Most states agree that the marital estate begins at the time of the wedding. However, some states hold that property acquired during a separation period is marital property, while others consider the date of separation as the cutoff date for acquisition of marital property.
Tangible property acquired before the marriage or inherited during the marriage is considered separate property, as are gifts. Inherited property, such as a boat or coin collection, belongs to the recipient and not subject to division at the time of divorce. Likewise, if you trade your inherited coin collection for a rare piece of artwork, the artwork is considered your separate property. The engagement ring usually is purchased by the groom before the marriage as separate property. However, because it was a gift to the bride, it is considered her property at the time of divorce.
The family home is usually the most valuable piece of tangible property and often has a lot of sentimental value attached to it. A parent who has primary custody of young children often will want to stay in the home. However, dividing up the equity in the home can present a problem if the spouse who stays in the house does not have available cash on hand to buy out the other person. The alternative is to sell the home and split the proceeds. In some cases, the spouses reach an agreement for one to stay in the house until the children reach college age, for example. Tax consequences should be a part of the decision on splitting the value of the home. The spouse who keeps the house might be eligible for some tax credits, but she would have to pay capital gains taxes if she sells the house.
Dividing tangible property during a divorce can be problematic because of the sentimental value attached to the property. Placing a dollar amount on the wedding china may not reflect the true value of the china to the couple. Rather than placing a dollar amount on all tangible property, many attorneys advise couples to reach a compromise that gives each of them what they really want. For example, the wife may take the china while the husband takes the sports memorabilia collection. Appraisals can be used for more valuable items that both people want, such as an antiques collection.