Some marital assets can be difficult to value in divorce for purposes of equitable distribution. When that happens, a financial expert may be needed to conduct a valuation. Experts are often used to determine what a pension, home, business and other types of property are worth. [link to post on when do you need financial experts in divorce] Unless the parties know the value of an asset, they cannot fairly divide it in divorce. Ideally, couples should agree on a valuation expert without involving the court. If that’s not possible, there are certain steps to follow.
Appointment by a Judge
When parties cannot agree on what an asset is worth, typically, the judge will ask each side to provide a list of three financial experts they would be willing to use. The judge will then appoint a financial expert from among those six names to do the valuation.
Sometimes, a judge will appoint an expert the judge is familiar with. However, that is usually avoided because the judge prefers the parties to be involved in selecting the expert. It also minimizes complaints that the judge picked a favored expert.
Disagreement over the Valuation
Once the appointment is made, the expert will value the asset and present a report. If one or both parties object, they can hire their own expert to conduct another valuation and challenge the first expert. If the issue is litigated, both appraisers will likely have to testify as to why their methodology is more accurate than the other.
Settlement vs Litigation
In lieu of going to court, the parties can agree to hire one or two experts, If two experts are hired, any difference between the two valuations can be split. It is more expensive to have two experts, but litigation may be even more costly and time-consuming. The parties should also weigh the cost of going to trial versus the potential gain from a higher valuation.
Another consideration in settlement is that if the judge has to decide the issue, he/she may order the property to be sold at auction as a way to decide the value.
Accordingly, in general, parties should try to resolve disputes without going to court. It’s critical to have accurate property valuations in order to negotiate a fair settlement in divorce. A skilled matrimonial lawyer can provide strategic advice and retain experts to help achieve that result.
If you are considering divorce, contact us to discuss how we can assist you in your case.
