Date of Valuation with Respect to Property Division in Divorce
One important factor in property division in divorce is the date of valuation of the spouses’ assets and liabilities for purposes of dividing marital property. The courts must consider the date of valuation in order to establish a consistent basis for determining a fair distribution of marital property. Fixing values for different assets and liabilities at different times can affect the true value of assets and liabilities that a spouse receives.
Each state has its own rules for determining the date of valuation. Most courts use one of three dates: the date the divorce petition is filed, the date of the final hearing, or the date of the decree. Some states use the date of actual separation.
In cases in which the spouses have a property division agreement or a prenuptial agreement, the court can accept the valuation date stipulated in the agreement. For assets that change value rapidly, courts may vary from the normal dates if necessary to achieve an equitable valuation and division.
For assets with seasonal price fluctuations or assets with high price volatility, such as volatile securities or commodity inventories, courts can use an average price or a moving average of the price computed over a time interval. Courts perhaps are less likely to deviate on their own from a fixed valuation date, and are more likely to rely on expert testimony to support a deviation from a fixed date. When both parties are well represented by counsel, courts are more likely to allow the parties to stipulate to valuations and the dates used to fix valuations.
Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.