How is Marital Property Valued?

In equitable distribution marital property cases, the court has a legal duty to identify assets and classify them as marital, separate, divisible or mixed assets (part marital and part separate). Parties are always free to stipulate or agree that assets have certain values, but if they cannot, the judge must make the decision on what each asset is worth.

What Does the Law Say About Value?

For marital property purposes, the value of a marital assets is fair market value, “the price which a willing buyer would pay to purchase the asset on the open market from a willing seller, with neither party being under any compulsion to complete the transaction.”[1] The court must use the net value of marital property, meaning the fair market value minus the outstanding debt at the time the parties separate. [2] If the court finds that a property is worth the same thing as the outstanding debt, the value is zero. Courts also assign negative values to assets worth less than the outstanding debt. New vehicles often fall into this category when the down payment is not substantial.

Valuing Marital Assets is Mandatory

Only if an asset, or part of an asset, is marital does the court then have to make a ruling on the value of it. It sounds like common sense but if neither of the parties presents evidence to the court of the value, the court cannot just make up a value. In one case[3], a couple owned a gas station, and the business was in the husband’s name. Although the wife proved that the business was established after marriage and before the separation, she failed to offer any credible evidence on the value of the business. The court must value an asset in order for it to become a marital asset. Therefore, the court had no choice but to award the business as his separate property.

Property Appraisers

The most obvious way to prove the value of an asset is by an appraiser who has special skill and experience with the asset at hand. People frequently have appraisals performed for jewelry, real estate and antiques. Often, the appraiser is hired by one or both of the parties to prepare a report for the court, to be used during the trial. Appraisers value marital property and the increases in value of separate property when the non-owner says there is an increase in value during the marriage. They also determine values of “divisible property,” which includes certain increases or decreases in the value of marital property from the date of separation until the date of the trial.

Certified Public Accountants

CPAs value any number of things, including the value of ownership interests in corporations, medical or legal practices, stock options and investment accounts, and other intangibles (i.e., the abstract concept instead of something you can hold in your hand). One routine asset that CPAs value is the marital portion of retirement accounts, meaning the value created between the date of the marriage and the date of the separation. All benefits generated before the marriage and after the separation belong to the employee spouse. If there are contributions to, or withdrawals from, a retirement account such as a 401(k) plan, the CPA also values those in comparison with the overall value.

Do-It-Yourself Values

There are a few assets that are straight forward enough for clients to testify about in court, with the help of a few trial exhibits. Vehicles sometimes fall into this category, mainly because there is a ready-made source of information concerning the value, such as the N.A.D.A Blue Book for vehicles. The value of whole life insurance is based on the cash-surrender-value of the policy, which is easy to obtain. Term life insurance has a zero-dollar value. The value of publicly traded shares (not a closely held corporation) on a given date can be shown by using the stock market index. However, when the shares are part of a larger portfolio or investment package, or if some of them are bought and sold before reaching the courtroom, a spouse must value the entire portfolio or investment package which isn’t as easy to value.

If you have unique personal property, like a moose head, you might find a ready-made market on E-bay or some other similar site. Depending on which side you’re on in a case, one disappointing (or exciting) thing is depreciation. The value of personal property, such as household furniture, at the date of separation is a depreciated value, meaning garage-sale value. This usually arises with brand new vehicles and household property. For example, a $1,500.00 computer purchased three years ago might be worth $200.00 on your date of separation.

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