Appraising Bankruptcy and Divorce Assets: A Case of Coin Collection Confusion

04/04/2018     News and Film, Appraisal Services, Trusts and Estates

Professionals who work with the valuation of estates should pay special attention to antiques, coins, stamps and related collectibles. An accurate and reliable appraisal is critical. In a recent bankruptcy case[1] related to a divorce action, the wife claimed that the husband failed to disclose assets during the bankruptcy process. The evidence at a hearing in the bankruptcy focused primarily on one asset: the husband 's coin collection.The husband's original bankruptcy filing listed a "[s]mall coin collection" valued at $5,000. However, the evidence showed that this disclosure was clearly inaccurate. He admitted to omitting a substantial number of coins, and subsequently amended his schedule A/B twice to list additional coins valued at more than $23,000.The husband testified that he originally omitted two of his three coin collections because he was “very nervous” and thought it was “a known factor” because the coins had been disclosed during his divorce proceeding. The Court didn't find the answer satisfactory. He subsequently amended his schedules and provided detailed descriptions of his coin collections, along with a description of how he calculated values.

However, the wife claimed that the coin collections were worth somewhere in excess of $50,000. But her claim failed for lack of evidence. The reason was that she produced “no competent evidence of value.” The wife prepared only an appraisal report of the former couples ' personal property, which included the coin collections. This wasn't admitted into evidence because it was hearsay.The judge found that, even if it were to be admitted, it would be of limited practical use to the court. The appraisal didn't include particularized descriptions (or even quantities) of the coins being appraised, nor did it contain even a rudimentary explanation of the appraisal methodology. Finally, the appraisal was conducted several months before the petition date. As such it wasn't very reliable in determining the nature and value of the husband's coins on the relevant measuring date.

Professionals dealing with cases of bankruptcy, divorce, or probate should retain qualified experts to provide accurate appraisals. In these types of cases, fair market value (FMV) or marketable cash value (MCV) methodology is frequently used. FMV is defined as the price that property would sell for on the open market. MCV is defined as how much the seller would actually receive if the item was offered for immediate sale net the expenses—or roughly 25-30% less than FMV. FMV takes into account the economic principles of free and open market activity, while market value refers to the price of an asset in the marketplace. An inaccurate or misapplied methodology of appraisal can result in unintended valuation errors and other possible consequences such as malpractice claims and other disputes.This is why a qualified appraiser should be engaged. The IRS defines a “qualified appraiser” as an individual who:has earned an appraisal designation from a recognized professional appraiser organization (such as AAA (Appraisers Association of America), ASA (American Society of Appraisers), or ISA (International Society of Appraisers)) or has otherwise met minimum education and experience requirements set forth in federal regulations regularly performs appraisals for which the individual receives compensation; andmeets such other requirements as may be prescribed by the Treasury. In addition, the IRS states that an individual won't be treated as a qualified appraiser unless he or she demonstrates verifiable education and experience in valuing the type of property subject to the appraisal.

To avoid legal issues and to conduct proper asset management, attorneys, accounts, and financial planners should work with a professional appraiser like Freeman's to obtain accurate appraisals of assets for taxation, equitable distribution, inventory listings, estate planning, divorce settlements, and insurance. For over 200 years, Freeman's has provided skilled appraisals of fine art, antiques, and jewelry to its professional clients with various valuation needs. Freeman 's expertise extends from insurance, probate and family division, gift, and divorce. This extensive experience places Freeman 's in a singular tier among auction houses; trusted, regarded and internationally respected. For more information on our services, please contact our Appraisal Coordinator Laura Cox at 267-414-1230 or


About the Author

Kurt R. Mattson is the President of Union Legal Research. He is the former Director of Library Services and Continuing Education at Lionel Sawyer & Collins in Las Vegas. Prior to this, he worked at BNA and other legal publishers, spending a substantial portion of his career working for Thomson Reuters. He serves as a consultant for several businesses, law firms, and marketing companies.Kurt received his JD from William Mitchell College of Law and his Masters of Law (LLM) from George Washington University. He received his Masters of Library Information Science (MLIS) from Wayne State University.Kurt is the editor of Lexis ' BSA/AML Update, co-author of A.S. Pratt 's Mortgage Procedure Guide to Federal and State Compliance, and author of Fair Debt Collection Practices: Federal and State Law and Regulation. He is also a contributing author of Brady on Bank Checks. Kurt is also a contributor to other business and legal publications. Want more Trust & Estates and Appraisal news? Sign up for Freeman's monthly Business Bulletin and never miss a beat.  [1] In re Vincent, 2017 Bankr. LEXIS 4380, at *2 (Bankr. D. Or. 2017).