Valuation of Marital Property in Divorce Proceedings

Valuation of Marital Property in Divorce Proceedings

One of the most critical parts of the property distribution process in divorce is ensuring that the marital assets have been properly valued. Either an overvaluation or an undervaluation of the spouses’ marital property can prevent the parties from receiving their fair share when their assets are divided.

Equitable distribution of marital property (which is defined as property that both or either of the spouses acquired during the existence of their marriage) is usually a complex process. Property valued for distribution can include pensions, as well as real estate, vehicles, the marital home, and any businesses owned by the divorcing spouses.

Depending on the type of property, it can be valued based pursuant to a variety of methods, including the following:

  • fair market value, which is based on the price which a buyer is willing to pay a seller for the item;
  • real value
  • (also known as intrinsic value), which is defined as the actual value of the property (market value is not ascertained), particularly for property which has either an overly high or low replacement cost;
  • liquidation value
  • , which is the net amount realized when the item has been sold and any debts have been settled;
  • replacement value
  • , which is equal to the cost required to replace a piece of property with an item that is similar or identical; and
  • sentimental value
  • , which is measured by the sentimental feeling that is attached to the object.

Expert testimony may not be financially practical or even necessary in some divorce cases. However, in cases involving closely held business, real estate, or professional licenses, the services of a valuation expert can be critical. Given that valuation issues are critical in the property distribution process, divorcing parties should expect to expend significant time and in some cases, resources, in ensuring that the parties’ assets and liabilities are fairly valued.

Copyright 2011 LexisNexis, a division of Reed Elsevier Inc.