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How Do Valuations on Assets Work in Divorce Cases?

Posted on March 05, 2013 11:17am
How Do Valuations on Assets Work in Divorce Cases?

Nearly every divorce involves the divvying up of assets between soon-to-be ex-spouses. Whether the final distribution is accomplished by agreement of the parties, or ordered by a judge after a trial, the objective is the same: a fair distribution of marital assets.

An accurate understanding of the extent and the value of your marital property is essential to achieving a truly fair division of assets between you and your spouse.

Divvying Up Assets

The values of liquid assets - such as checking, savings, or money market accounts - are obvious. You need only check the most recent statement for the account to determine the current value. However, liquid assets are usually just one part of a marital estate. Many couples will have a variety of other assets and property interests to divide, and the value of those assets may not be as easy to identify.

Common examples of assets that should be valued by a professional prior to your divorce include the following:

Real Estate Assets

Divorcing homeowners should most certainly hire a qualified residential real estate appraiser to value their home. The appraisal will provide the spouses with a reasonable estimate of the home's current market value, as well any costs that would be incurred to improve the home and maximize its marketability. This information is relevant whether the parties plan to sell or retain the home.

Any other real estate holdings that you may have will also require valuation. Keep in mind that certain unique types of property will require a uniquely qualified appraiser. Commercial or rental properties, farmland, and/or undeveloped parcels, should all be appraised by an appraiser with experience in valuing the specific type of property (and preferably the specific type of property in the specific area where it is located).

Defined Benefit Plans Assets

Traditional pension plans (also called "Defined Benefit" plans) guarantee an employee a certain monthly payment after retirement based on a number of factors such as the employee's salary, years of service, and age at retirement.

If the pension payments are not going to be equally divided between the spouses when they become available to the employee, a present day value, or a projection of the future value, must be obtained. Usually, this will require the assistance of an actuary or forensic accountant.

Businesses

Sole proprietorships, closely held businesses, and professional practices all present unique valuation challenges in the context of a divorce. Whether the spouses own a business together, or individually, it is important that the business be appraised. Some businesses may not have significant value aside from the income they generate for the owner.

The specific method by which a business should be valued is highly dependent on the nature of the business. The appraiser that you consult should have specialized experience in valuing the business at issue in your case.

Personal Property

Personal property is sometimes overlooked in valuing the community estate, but this can be a big mistake. Artwork, jewelry, antique or vintage furniture, coin and stamp collections, even clothing, can all have significant market value. That's right; the obscure record or Star Wars memorabilia collection that your spouse has been curating for the last ten years may in fact be very valuable.

All of the above considerations can seem overwhelming, especially if you are just starting the process of a divorce. An experienced family attorney can not only help you identify your various property interests, he or she can also put you in contact with the right professional for asset valuation.

For more information, contact a divorce attorney at McKinley Irvin, or read more about Understanding the Division of Property in a Divorce.

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