What Affects the Asset Valuation Process in a Divorce?

When a couple gets divorced, they may have to divide the value of various assets they own as marital property. This process cannot be completed without an accurate assessment of the value of assets such as real estate, business ownership interests, and valuables like jewelry, artwork, or antiques. As a result, couples may need to undertake asset valuation during divorce to help equitable divide the marital estate. 

What Assets Get Divided in Divorce?

During a divorce, spouses must divide their marital estate. A couple may have a prenuptial agreement or sign a marital settlement agreement determining how the couple will divide their marital property, or the court can issue a judgment dividing the marital estate. In New York, courts undertake an equitable division of marital property, which divides property fairly, though not necessarily equally, between spouses. 

Common examples of marital property divided in divorce include:

• Marital/family homes
• Vacation properties purchased during the marriage
• Income real estate purchased during the marriage
• Joint bank accounts
• Growth in investment accounts during the marriage
• Contributions to retirement accounts during the marriage
• Ownership interests in businesses started during the marriage or growth in the value of such ownership interests
• Vehicles, including cars, boats, watercraft, or aircraft
• Jewelry
• Artwork
• Antiques
• Collectibles

Spouses do not divide separate property owned by each spouse, such as property acquired by a spouse before the marriage or inheritances or separate gifts received during the marriage. 

Factors That Influence Asset Valuation

When performing an asset valuation for marital property during divorce, various factors will affect the value that an appraiser assigns to an asset, such as:

• Valuation methods: Appraisers can use various valuation methods to assess the value of complex assets like real estate or businesses. Depending on the nature of an asset, an appraiser might use valuation methods like the income-based approach, the asset-based approach, the sales comparison approach, or the replacement cost approach. Each valuation method may arrive at a different value for a specific asset; thus, the parties, their appraisers, and the court must determine the most appropriate valuation method for an asset. 
• Market conditions: Market and macroeconomic factors can affect an asset’s value, especially when dealing with assets like real estate, stocks, or business interests. 
• Ownership/title issues: Complexities in ownership/title for an asset can negatively affect its value, especially if they make it challenging to transfer or sell ownership interests. 
• Tax implications: Tax implications for the transfer or sale of an asset during property division in divorce may also affect the asset’s value. Transfers or sales can trigger tax liabilities such as transfer, income, or capital gains taxes. 

Common Disputes Over Asset Valuation

During asset valuation in divorce, couples may have various disputes, such as:

• Disagreements over asset values: Couples may reach an impasse over the fair value of a marital asset, especially when their appraisers reach significantly different valuations. 
• Allegations of hidden assets: One spouse may accuse the other of concealing, unlawfully selling, or transferring marital assets. 
• Balancing the division of property to reach an equitable distribution: Couples may have disputes over trading various assets to maintain an equitable division of the marital estate. 

Steps to Ensure Accurate Valuations

Spouses can take various steps both before or during a divorce to reach fair and accurate asset valuations, including:

• Hiring an experienced, qualified professional: Spouses can rely on knowledgeable professionals, such as appraisers, accountants, and attorneys, to guide them through the asset valuation process.
• Gathering all relevant documentation: Having complete records can help appraisers and accountants determine a fair market value for an asset. 
• Disclosing all assets: Spouses can avoid penalties or disadvantage themselves during a divorce by disclosing all assets, whether separate or marital. 

Contact a Divorce Attorney Today

If you and your soon-to-be ex-spouse own high-value or complex assets, asset valuation can play a critical part in your divorce. Contact Aiello & DiFalco LLP today for a free, confidential consultation with a divorce attorney to learn more about the asset valuation process during property division in divorce.