Basic Principles of Valuation

California is a community property state, which means that when a couple divorces, the community property is divided equally between the spouses. When asset needs to be divided, but it cannot be split in two (ex. stocks, cash) or it cannot be liquidated, the asset will have to be valued.

So, what are the basics of how an asset is divided in a California divorce?

Definition of Value

Value of an asset in the context of a divorce is “fair market value,” which is the highest price on the date of valuation that would be agreed upon between (1) a seller who is willing to sell but not in an urgent need to do so and (2) a buyer who is willing and ready to buy but does not have a need to do so.

Who Determines Value?

In California, if the spouses cannot agree to a valuation of a property, then the court determines the value. The court can use experts to help with this determination, but a judge is granted a lot of discretion so long as there is evidence to support the determination.

In mediation, if the spouses cannot agree to a valuation of property, they may agree on who will be the “fact-finders”. The couple in mediation may agree to hire an expert who will determine the value for them. In such cases, the expert fee can be shared, and the couple can also agree that the expert’s valuation is not binding.

Time for Valuation

In the litigation context, community assets and liabilities are valued as near as practicable to the time of trial. If a spouse wants an alternate date for valuing a community asset or liability, that spouse must give proper notice to the other spouse and court.

In mediation, the spouses can decide what is the fair and convenient time to value assets.

Mediation allows for more control over the ‘who’ and ‘how’ of asset valuation. We can help you and your spouse take control. Contact us at info@cordiallaw.com.