Dividing the marital estate: part two

A divorce can be a time of emotional upset and uncertainty. Many new lifestyle changes may lie ahead. An individual may need to draw up a financial strategy for how he or she will handle a new living budget post-divorce. Yet before an individual looks too far ahead, there is a more immediate matter to attend to: dividing the marital estate.

In our last post, we cautioned that the inventory phase of the divorce shouldn’t be rushed, as the consequences of a financial misstep greatly outweigh any perceived benefit of expediency. After an inventory of the marital estate has been compiled, the hard work of asset valuation begins.

Understanding the fair value of each asset is essential to a fair divorce negotiation process. For example, an individual needs to understand whether accepting the family home in exchange for relinquishing rights to artwork, securities or even a family business is a fair trade-off.

Notably, dividing marital assets is possible only after each asset has been assigned a value. However, discrepancies can arise over the valuation date. Assets whose value depends on forces outside the spouse’s control, such as market fluctuations, are considered passive and might be valued later, perhaps on the trial or settlement date. The rationale for waiting is that a big swing in a volatile stock market could greatly change an asset’s value.

Assets within a spouse’s control, in contrast, might be valued sooner, perhaps at the time of separation. The rational for the earlier valuation of such active assets is to prevent a spouse from deliberately diminishing their value.

Our law firm can guide you through the entire asset inventory and valuation process. We have established relationships with forensic accountants, financial advisors and tax professionals to answer complex questions or offer expert opinions. We will provide strong advocacy to fight for a fair property settlement.

Source: CNBC, “Breaking up is hard to do: Protecting assets in divorce,” Kelli B. Grant, Jan. 17, 2016