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How are complex assets valued in divorce?

When young couples split up, typically most of their divorce dilemmas are centered around issues of custody and visitation if any children from the union, as typically there is less marital property to divide. However, the longer the marriage lasts, the more marital property that is acquired and must be split.

In order to achieve an equitable division, all assets have to be properly valuated. So how is this achieved? First, a valuation date has to be determined.

Establishing the valuation date that gives you the advantage is vital, because there can be a big gap between the date of separation and the actual divorce. It's simplest when the date of separation can be used, but this is not written in stone.

Most active assets use the same valuation date as separation date, but passive assets usually use the trial date.

Active assets fluctuate in value with their owner's actions, which is why it's important to pinpoint the separation date to prevent devaluation from occurring.

But the value of passive assets are determined more by forces beyond the divorcing couple's control, such as property values and stock portfolios. So if a couple decided to split at the height of a recession like the one from which our country is just emerging, it would not be fair to value IRAs and other financial assets at the value they had prior to the effects of the financial upheavals that come with any recession.

But there are exceptions, such as when only one spouse is involved with the management of a business or other venture. Because he or she could under-perform and let the business tank, or redouble their efforts and see a sudden surge in the active asset's value, typically these are considered active assets subject to the date of separation.

But what if the recession drives customers away through no fault of either spouse? Judges could interpret the law and maintain an asset to be passive, thus using the trial date instead.

Because there are many contingencies involved in valuating complex assets, it's always wise to seek out professional legal guidance before agreeing to any settlement terms.

Source: Forbes, "How the Valuation Dates of Different Assets Are Decided During Divorce," Jeff Landers, accessed Oct. 21, 2016

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