While it often applies to a company or professional practice valuation isn’t just for a business in a divorce. What is valuation and how is it helpful in the successful completion of the divorce process in Carlsbad and North County?
Here in California, all marital debts and assets must be divided evenly between the former spouses. The process of property division is based upon the value of each asset as well as the amount of each debt. Even experts may disagree upon the value of any asset such as a piece of jewelry or a rental property. However, the Court or the parties themselves must either agree upon or establish a firm valuation for every asset before the division of community property may be accomplished.
If the value of an asset is not properly established one of the parties may not be given a full and fair share of the marital assets in a divorce.
We have often discussed the process of valuation as it applies to determining each spouse’s interest in a business or professional practice. However, valuation isn’t just for a business in a divorce. The same process may be applied to more tangible and intangible assets such as a collection of rare items, paintings and sculptures, vehicles, investments or retirement assets.
For example, the spouses may own two separate issues of stock, each with a present value of $100,000. However, if one stock was recently purchased for $85,000 and the second was purchased years ago at a price of $22,000 there is a substantial amount of appreciation which has occurred and this would affect the post-tax value of the asset. While they have the same valuation of $100,000 they are not equal in value.
Valuation should occur (or be updated) as close to the actual date of the hearing or mediation on the subject as possible. This ensures the most accurate valuation of any asset at the time is to be divided between the parties.
There are many ways to establish the value of any asset, and the Certified Family Law Specialists at Burke & Domercq work with our clients and external specialists and experts to protect their business and financial interests.