One of the most notoriously challenging parts of a divorce involves the separation of items, often called assets or properties. When it is time to part ways, every couple has to figure out how to divide their accumulated stuff, which can include everything from the home and the automobiles to vintage collectibles and retirement assets.
When it comes to dividing debts and items, the court has to first determine the types of holdings and properties involved. Some will be considered separate and some will be considered marital. The marital items will need to be divided between the couples. Once categorized, some of the items will go to one spouse, others will go to the other. Some items will be liquidated and the money split between the two parties.
Proper Valuation Is Critical
One of the most important aspects of the process is determining the appropriate value of the various items that are being divided. The court will look at all the factors in the divorce — including earning capacity, primary physical custody, spousal support and child support payments and other factors — to determine an equitable division between the spouses.
It is impossible for the court to know how to divide things equitably without knowing the proper values of the things being divided, which is why valuation is so important.
Determining The Value Of Non-Financial Property
Financial holdings can be considered separately. For our purposes, we are talking about non-financial items like fine art, classic cars and digital currency. There are a few critical factors to consider when dividing items in a divorce.
- How the values of items are determined: For more valuable items, there are many possible sources of information for determining value, from assessments from professionals, the value of recent sales of the same or similar items and the actual cost for selling the item to the specific value listed in a book (like the blue book value for an automobile). The type of item usually determines the best approach to finding out an item’s value.
- Who decides the values? Since there can always be disagreement as the appropriate value of any item, the opinions of experts, recent sale values of similar items and other factors are not necessarily conclusive. Usually, the divorcing spouses stipulate to an agreed-upon value of an item, based on a variety of possible sources of valuation. However, if the parties disagree the court could use its discretion to use a different value for an item, as long as its value is reasonable and supported by the evidence.
- The date of valuation: In Colorado, generally the valuation date is set as the date the court finalizes and signs the decree of divorce. For ease of computation, parties sometimes agree to value their various accounts and items at a date (such as the beginning or end of a month) relatively close to the date scheduled for finalizing the divorce.
People sometimes assume that the purchase price of an item should be its value for divorce purposes. People also sometimes assume that the way to value an item is to determine its replacement cost. Neither of those is correct. Rather the relevant value is the what the item might sell for in its current used condition. These are just a few of the critical considerations when non-financial items have to be divided in a divorce or separation. There are always nuances, potential pitfalls and constant disagreements in most divorces, so make sure you talk with an experienced property division attorney to help you determine accurate values for your more expensive items.