How Different Types of Assets are Valued in a Divorce

How Different Types of Assets are Valued in a Divorce

One of the most important, and often contentious, aspects of divorce is the division of assets. For a marital estate to be divided equitably, each asset must be assigned an accurate monetary value. While this may seem straightforward for some assets (cash, for example), the task can become much more complex for other types of assets. It takes more than knowledge of the current dollar value of an asset to divide the asset properly; a thorough understanding of the asset’s liquidity and potential tax implications is also necessary. A Portland divorce attorney who is well versed in the valuation and distribution of assets can ensure that your financial interests are protected.

Below is a basic overview of how different types of assets are valued in a divorce:

Real Estate

Real estate values fluctuate often, so it is important to have your home or other real estate property appraised by a licensed appraiser, especially if you or your ex-spouse wishes to keep the property. This will ensure a fair and accurate valuation. Alternatively, you may decide to sell the marital residence and split the proceeds from the sale.

Investments

Investments may either be separate or marital property. For them to be divided fairly, their present value must be weighed against when the investment was made and with which spouse’s money. For example, for a $25,000 investment made by one spouse prior to the marriage that appreciated to $45,000, the gain of $20,000 may be subject to division during divorce. However, if you added to your initial investment with marital income, the entire value of the investment may be subject to division because it could now be considered marital property.

Business Assets

The valuation of a business involves many factors, including the business’s income and expenses, the business’s tangible and intangible property (including everything from office equipment to trademarks), and more. The fair market value of the business will also depend on its appreciation or depreciation over time, the valuation date, and the formula or method used to determine how much the business is worth. Appraisers and other business experts will likely be required to determine which aspects of the business are separate property from before the marriage and which aspects are marital property that is subject to division.

Pensions & Retirement Accounts

Defined contribution plans, such as 401(k)s, are simpler to value than defined benefit plans. For defined contribution plans, the value is simply the balance of the account. For benefit pension plans, the valuation date is important because of the constant fluctuation in value. These plans can be divided in one of three ways: the present value or cash out method (awarding a lump-sum to the non-employee spouse in exchange for the employee getting to keep the pension), the deferred division or future share (in which each spouse is awarded a share of the benefits if/when they are paid in the future), and reserved jurisdiction (in which the court will order a distribution sometime in the future).

Questions About Property Division? Consult with a Portland Divorce Lawyer

Property valuation and division matters can be highly complex. If you are considering a divorce in Oregon, it is in your best interests to work with a Portland divorce attorney at McKinley Irvin. Our firm is known for providing personalized client service and attorneys who practice at the forefront of family law. We encourage you to get in touch with our firm to learn more about how our team can assist you.