Amidst the emotional turmoil of divorce is the very practical and methodical division of assets. You are, after all, dissolving a contract.
The Rembrandt on the wall, the family home, and even your business are all fair game.
To keep this division of assets actually fair, courts and lawyers will recommend divorce valuation—a process where all marital assets are valued and divided equitably, if not equally.
We understand the weight of this moment in your life and are here to guide you with clarity and compassion through the process of valuing your shared assets.
Key takeaways:
Before we dive in, it’s important to understand the key terms used in divorce valuations.
Here’s a breakdown of some you’ll come across:
In a divorce, property is divided into two types: marital and separate.
Marital property is everything you and your spouse own together. Think of the house you bought after getting married or the car you share.
Separate property is what you owned before the marriage or received as a gift or inheritance just for you.
For example, if you inherited a painting from your grandparent, that’s yours alone.
Some jurisdictions will also divide assets owned before marriage. So it’s best to look at your State’s laws.
A valuation date is a specific day chosen to decide how much your marital property is worth.
This date can be the day you separate, file for divorce, or another date the court picks.
It’s important because the value of things can change over time, like how stocks go up and down.
Appraisal and fair market value are terms used to figure out what your property is worth in a divorce.
An appraisal is a detailed report by an expert on the value of an item, like your house, a piece of art, or even your business.
Fair market value is how much something would sell for on the open market. It’s like the difference between getting a professional to tell you what your car is worth (appraisal) versus what similar cars are selling for on websites (fair market value).
Equitable distribution and community property are two systems states use to divide assets during a divorce.
Equitable distribution means assets are divided fairly, but not always equally. Factors like income, length of marriage, and future needs can influence who gets what.
New York and Florida are examples of equitable distribution states.
Community property states split marital assets 50/50, assuming everything acquired during the marriage is owned equally by both spouses.
As of 2024, there are nine community property states:
Some states in this list may apply equitable distribution principles under certain circumstances.
All the other states not included in this list typically follow the equitable distribution method. But some states, like Alaska, South Dakota, and Tennessee, allow married couples to opt into community property rules.
Now that we’ve covered the basics, let’s go into how asset divisions and valuations work in practice.
That which has been one must now become two. Two lives, two sets of assets.
You can’t cut a house, business, or other piece of property in half. So to divide assets fairly, they have to be valued.
Valuation during divorce is about fairness, legality, and preparing for the future.
You can’t go off of what you feel something is worth. Especially, when you and your soon-to-be former spouse disagree about what the value of different assets are.
That’s why there are third-party valuators available. They apply specific methodologies across different asset types to reach fair valuations.
No. There are instances where couples can agree to asset division without the need for valuation.
However, where there are disagreements or complexities, the court may order formal valuations from third-parties.
Business Ownership: Valuing a business requires expert analysis to determine its worth accurately.
Retirement Accounts: Splitting these accounts can have tax implications and might need a court order.
Real Estate: Deciding who keeps the home or whether to sell it can be complex, often requiring appraisals.
High-Value or Unique Assets: Art, antiques, or collectibles need specialized appraisals to determine their value.
Divorce valuations can be influenced by a range of factors, each contributing to the overall assessment of assets and determining how they are divided.
Here are some key factors that play a crucial role:
Here are seven steps that can guide you through valuing your assets during a divorce:
Start by listing every asset, then categorize them. You also need to determine which assets are considered marital property and which are considered separate property.
Here are some common asset categories:
Collect all relevant documents for each asset category, such as titles, purchase receipts, and recent statements, to support valuations.
The value of assets like stocks and bonds can fluctuate over time, so it’s important to determine a specific date for valuation.
This could be the date of separation, the date of filing for divorce, or another date mandated by the court or agreed upon by both parties.
Some state courts dictate when this valuation must be, such as the date of the trial, while others leave it for the divorcing couple and their lawyers to decide.
Ask your lawyer what the requirements are in your state.
For high-value or complex assets like real estate, businesses, or valuable personal property, professional appraisals may be necessary. You should hire qualified appraisers to obtain the most accurate and current value of these assets.
Below we’ve outlined the process for appraising common high-value assets, including:
You or your spouse may own complex business interests or assets, such as cryptocurrency, a carried interest in a venture fund, or a private equity fund.
In this case, the situation gets a little more complex. We recommend working with a reliable third-party valuation company who can make this easier for you.
For instance, at Eton, the valuation process is really simple and fast:
We also offer ongoing audit support if needed. Reach out to us for more information.
Valuing retirement accounts and pensions can be complex, especially when determining the marital portion of these assets.
You might need to hire a financial expert or actuary to calculate the present value of these accounts or to understand the implications of dividing them.
Just as assets are divided, so too are debts and liabilities. Identify all marital debt, including mortgages, loans, credit card debts, and any other liabilities.
This will help in understanding the net value of the marital estate.
With a clear understanding of the value of all marital assets and liabilities, negotiations can begin regarding the division of these assets.
This can be done through direct negotiation, mediation, or, if necessary, litigation.
The goal is to reach an agreement that is fair and equitable to both parties, taking into consideration the laws and guidelines of your jurisdiction.
Throughout this process, it may be beneficial to work with a team of professionals, including a divorce attorney, financial planner, accountant, and valuator to ensure that all assets are properly identified, valued, and divided.
Each divorce case is unique, and the laws governing the division of assets vary by jurisdiction, so professional guidance is essential.
Overwhelmed by the number of assets and different valuation processes involved in your divorce?
Want to ensure everything is divided fairly?
In these instances, it’s best to look for a third-party valuator who is experienced with asset appraisal and is emotionally separated from the divorce.
At Eton, we help clients through the divorce process by valuing assets such as their business.
Review our divorce valuation services and get in touch with me to find out how we can support you and guarantee a smooth and accurate divorce valuation.
Schedule a free consultation meeting to discuss your valuation needs.
Chris co-founded Eton Venture Services in 2010 to provide mission-critical valuations to venture-based companies. He works closely with each client’s leadership team, board of directors, internal / external counsel, and independent auditor to develop detailed financial models and create accurate, audit-proof valuations.
