In a divorce, courts are to divide marital property in a just manner when considering all the factors in an equitable jurisdiction. To divide marital assets in a just manner, courts need to know the value of the marital assets as well as the debt.
As a preliminary matter, parties are generally asked to file financial statements with the court. In the financial statements, parties are to list all the marital assets and debts. This provides the family court judge an overview of what marital assets and debts exist.
The exact procedure in terms of how this works can certainly vary by state and locality. Different states and counties can have different forms, deadlines and nuances.
However, in a general sense, parties are often asked to provide an approximate value for all marital assets early in the case. Marital assets can almost everything from the house, cars, investment accounts, retirement accounts, business interests, trust interests and an endless array of other assets.
For many parties, this can be quite difficult. They might not have had a recent appraisal giving an exact value for a particular asset. Thus, when they are asked to provide a value on their financial statements, they might not know how to answer. This can lead to parties essentially guessing as to a figure to complete the financial statements.
There are two mistakes that parties might make when attempting to list a value of a marital asset in which they do not know the value.
Mistake one is overstating the value of the asset. In other words, they list the marital asset at a significantly greater value than it is actually worth. This can be the case with various assets. However, as it relates to larger assets, like the marital home, business interests or other large assets, over estimating what an asset is worth can be a big mistake that can skew the property division in an unjust manner.
Some parties can make the opposite mistake. They may underestimate what certain marital assets are worth. This can be a big mistake as well that can skew the property division.
Ultimately, courts need accurate values for marital assets in order to make a just division. If the assets are overvalued or undervalued, the court is not going to be working with accurate numbers. If the numbers are not accurate, the court can end up dividing assets in a way that would appear just to the judge, but is not actually just when looking at real figures.
Further, when a party underestimates what a value is worth as well, courts can sometimes think that a party is doing that on purpose in order to hoodwink the court on the value of a particular asset. This can oftentimes hurt the credible of a party.
If a party does not have a recent appraisal or valuation, what most parties ought to consider doing is having the asset formally appraised first by an expert. If the party is able to do so by local rules, they might state that the “value is unknown at this time” until such time as that valuation is completed.
Either way, parties need to be careful not to overestimate or underestimate the value of a marital asset in a divorce. Doing so can cause an adverse result for a divorcing party.
If you are going through a divorce where there are significant marital assets, Stange Law Firm, PC can help. You can contact us at 855-805-0595.