In any divorce case, it is important to determine the value of marital assets in order to divide them equitably between the parties.
For some assets, such as a marital home, it is usually best to use the services of an expert, such as a certified real estate appraiser, in order to accurately value the asset. Usually the cost of such an appraisal is relatively modest and well worth the price. However, the parties may also agree to use some other method of valuing real estate at virtually no cost, such as the most recent tax appraisal or a market analysis by a realtor. These valuations may not always be as precise as one by a certified appraiser. For example, tax valuations typically reflect the value of the property at the beginning of the year, and would not include any increase or decrease in the home’s value if the divorce is taking place much later in the year. In addition, although tax valuations value the home as of the beginning of the year, a copy of the tax appraisal is typically not received by the homeowner until several months later, again making current valuation somewhat difficult.
The other question that may come up is whether one party or the other has a premarital interest in the marital home; and if so, how to value that premarital interest. Real estate appraisers can typically make this determination as well.
For some assets, such as personal property, it would be obviously impractical to hire an expert to perform a valuation. The parties would typically have a rough idea of what their personal property is wort,h and it would not be at all economical to hire an expert to value these assets. Personal property is typically valued at the amount of money it would bring in at a yard sale or a garage sale, not the purchase price or replacement value. Oftentimes this can be estimated in layman’s terms as roughly equaling the value of a “hill of beans”, as most personal property will not retain its original purchase price value.
This brings up the issue of sentimental value. Certain assets may have a value far beyond their worth in mere dollars and cents. For example, the parties may own items of artwork, paintings, home movies, photographs, collections, jewelry, or even pets that are especially cherished by one or both parties and that cannot be valued adequately in monetary terms.
Vehicles can be valued fairly easily by using their blue book values.
Businesses owned by the parties, depending upon their complexity, may require an expert business appraisal. If the business is fairly simple and the parties have a good idea of all the assets and liabilities, and income and expenses, they may be able to agree upon a reasonable value of the business. But the more complex the business, the more difficult it may be to value, oftentimes necessitating the use of an expert such as a CPA.
401 (k) plans and other defined contribution retirement plans are typically easy to value at any particular moment in time by simply referring to the account statements received each month. However, determining the premarital portion of defined contribution plans can be tricky and may, depending upon the circumstances, require the services of a forensic accountant to go through all of the account statements and determine how much appreciation or depreciation in the account is attributable to premarital assets.
Pension plans can be tricky or impossible to value, depending upon the circumstances. This is because of the uncertainty of when the owner of the plan will retire, and whether or not they will continue in service with that particular employer, among other considerations. Oftentimes, pension plans are simply divided pursuant to the Woodward formula, which awards the non-employee spouse a percentage share in the pension equal to one-half of the amount that accrued during the marriage. The non-employee spouse would not then receive their marital share until after the employee spouse has retired, at which time the marital portion can be precisely ascertained. I have previously posted about the very important Woodward case on June 4th, 2014.
In cases where the value of marital assets is fairly low and can be ascertained simply, there may be no need to pay for the services of any experts. But where the assets are very substantial and/or complex, it may be advisable to use the services of an expert or experts in order to value the big ticket items.
Whether or not to use an expert or experts to value marital assets is not always an easy decision. It may involve an analysis of the complexity of the asset(s), the amount of value at issue, and whether or not it is economical to hire an expert to do the valuation.
It is often best to consult with an experience attorney in making this determination.
This material should not be construed as legal advice for any particular fact situation, but is intended for general informational purposes only. For advice specific to any individual situation, an experienced attorney should be contacted.