Unless divorcing spouses have a prenuptial agreement in place, they may disagree on key aspects of property division. The larger and more valuable marital assets are, the more likely they are to cause conflict during a divorce.
Spouses often disagree about the most reasonable way to address key resources, such as real estate, investment accounts, business holdings and retirement savings. In fact, they may disagree about whether those resources are subject to division at all or how much they are worth.
Those disagreements can drastically increase the amount of time it takes to settle divorce issues. More time spent negotiating or litigating also generally means higher overall divorce expenses. Those with sizable marital estates that contain assets of variable value may choose to set a valuation date with one another as a means of facilitating compromise and ensuring success during property division negotiations.
What is a valuation date?
The process of establishing a fair market value for assets requires an assessment of many factors. When looking at the marital home, for example, the size and location of the home, as well as the condition of critical systems, are all important considerations.
Additionally, the date that people list their home can have a profound impact on what others may offer for it. Seasonal demand, local news stories and the overall economy all influence the value of major shared assets.
A valuation date is a specific day that spouses agree upon for the purpose of estimating the fair market value of their marital property. Frequently, spouses choose the date of their initial separation or the day when one spouse filed divorce paperwork as the valuation day.
How does agreeing on a date help?
Separations may last for years, and divorce can drag on for many months. If the spouses each choose a random date during their separation or divorce proceedings for the purposes of asset valuation, they could easily reach vastly different figures for the same resources even when using the same basic information about those assets.
Valuation dates help ensure that the professionals guiding property valuation use economic and market information from the same day. While they may still reach different figures, their estimates may be much closer in value than in cases where one spouse chooses a date six months after the date selected by the other spouse.
The sooner that spouses agree on the valuation of key resources, the faster they can potentially settle their property division disagreements fairly. Learning more about the nuances of high-asset divorce, including key elements of the property division process, can help spouses navigate a difficult time gracefully.
