How Do Assets Get Valued in a Divorce?
Posted July 25th, 2024.
Categories: Blog.
During a divorce assets must be valued so they can be split during property division. The way that items are valued will depend on various factors. Seek professional help when valuing your assets and meet with a Cherry Hill property division attorney to obtain skilled representation.
Is New Jersey an Equitable Distribution State?
New Jersey is an equitable distribution state. Community property states are ones where each spouse is entitled to half of the total marital property. While couples in New Jersey and other equitable distribution states may be awarded a 50/50 split, that is not necessarily the norm. In an equitable distribution state, marital assets are divided not equally but based on what is fair. Because property is divided equitably, it is important to ensure that assets are valued accurately.
How Can I Determine the Value of Assets During a Divorce?
Assets can be valued in a variety of different ways. There may not be one right way over another, but some evaluation techniques are used more frequently to determine the value of property. The two most common ways are:
- Appraisal: An appraisal can be conducted by a variety of professionals depending on the item or property. Take a piece of artwork, for example. It is important to have several people evaluate what the piece is worth. You do not want to unknowingly give up a piece of artwork that is worth a significant amount.
- Fair market value: Fair market value is the price of an asset that can be listed when both the buyer and seller have a reasonable understanding of the value of the piece. It is what the item would be worth if it were to be placed on the market today.
Although these are generally the most used and reliable ways to evaluate the value of an asset, the following can be considered as well.
- Purchase price: If you spent $10,000 on a piece of property there is a good chance that you consider it to be worth $10,000 in your mind. While this is not always realistic, many people consider an item worth the amount that they paid for it.
- Depreciated cost: Many assets lose value over time, either inherently, or due to damage and aging. Some people may consider what they paid for an item at the time of purchase and calculate what they believe to be the value now based on subtracting the depreciated value.
- Sentimental value: One of the most important considerations that should not be overlooked is sentimental value. As humans, we tend to have strong emotional connections to our belongings, especially when they hold memories of the past or loved ones. Sentimental value could be a significant factor during property division. Someone may be willing to give up $50,000 worth of other assets just to keep one item that means the world to them. In this situation, the item could be considered worth $50,000 to one spouse even though in reality it is far less.
In general, valuing property is subjective. Items are only worth what they will sell for. Your divorce lawyer can offer crucial insights during the divorce process and property division. Take advantage of their experience and knowledge and reach out to a skilled attorney today.