Valuation of Assets in a Divorce
Law Firm of Burman, Critton, Luttier & Coleman Blog
By Stephen Walker, Associate Attorney
Of critical importance in complex divorce cases is the valuation of assets. In a divorce, marital assets will be divided up between the parties through a process called “equitable distribution.” In doing so, the trial court generally begins with the premise that the distribution should be equal. See § 61.075(1), Fla. Stat. (2012). In order to equitably distribute the marital assets, the judge must identify the marital assets and “the individual valuation of significant assets.” See § 61.075(3)(b), Fla. Stat. A fundamental step in the process of valuing and equitably distributing the parties’ assets is choosing a date on which the value of those assets will be fairly and properly measured. Rarely will the value of significant assets remain static during the pendency of a divorce proceeding. The date for determining the value of marital assets and liabilities is governed by § 61.075(7), Fla. Stat.:
The date for determining value of assets and the amount of liabilities identified or classified as marital is the date or dates as the judge determines is just and equitable under the circumstances. Different assets may be valued as of different dates, as, in the judge's discretion, the circumstances require.
Thus, under the current statute, there is no bright-line rule, let alone a presumption, regarding the determination of the dates for valuation of marital assets. The decision is, in large part, left to the judge’s discretion. However, over the years, certain standards have been established and followed with fairness and equity being of paramount consideration. When possible, most trial courts will endeavor to value marital assets and liabilities on a day as close as practicable to the trial if their fluctuation is passive (i.e., not due to the efforts of either party). Certain facts, though, may lead the court to choose an earlier date, such as when the increase (or decrease) in marital assets is directly caused by the actions of one spouse.
In essence, the judge will likely choose among three options for dates in valuing marital assets and liabilities: (1) the date of separation, (2) the date of filing the petition, and (3) the date of trial. Historically, in deciding between these three options, trial courts have endeavored to choose the date that results in the most fair and equitable valuation for each asset by evaluating whether the actions of one party directly affected the increase and decrease in value of the asset at issue after the date of separation or date of petition. In such cases, using the earlier of the date of separation or the date of filing the petition is deemed appropriate because the increase or decrease in value is a direct result of one spouse’s actions. Consequently, the valuation date will ensure that the spouse who directly caused the increase or decrease in value receives the benefit or detriment of his or her actions, by attributing the difference in value of the subject asset or liability between the earlier date and the trial date solely to that party. On the other hand, when a long period of time passes between the date of filing the petition and the date of trial, and the change in value of an asset or liability is the result of passive forces, such market conditions or fluctuation, as opposed to the direct actions of one spouse, the increase or decrease in value of that asset or liability should be allocated between the parties equally, thus, militating towards use of the date of trial as the valuation date.
The attorneys at Burman, Critton, Luttier & Coleman are experienced in handling complex divorce cases. Should you have questions regarding your case, please do not hesitate to contact me directly at SWalker@bclclaw.com.