When divorcing couples have property that needs to be valued, they often turn to an appraiser or valuation expert. Determining what marital property is worth is essential to equitable division in divorce. Hiring an expert helps ensure that the valuation is accurate. Ideally, spouses should get a neutral appraisal, where they both agree on the appraiser. If they cannot agree, the court may need to get involved, prolonging the process and increasing costs.
When Is an Appraisal Necessary?
Generally, an expert is used for the valuation of a home or other real property, a pension or other retirement account, art and collectibles or a business. Each of these has nuances that require both financial and legal expertise to ensure accuracy.
What Is a Neutral Appraisal?
In a neutral appraisal, both sides agree to hire the appraiser and share the cost. If the spouses have similar incomes, the fee is divided evenly; otherwise, each spouse pays a pro rata share of the cost according to their respective incomes.
Since they are jointly hiring the appraiser, they can each speak to the individual, ask questions and have a right to be present at the appraisal provided the other spouse is either present or waives the right to be present.
This is the ideal situation, as it saves time and money.
What If Spouses Cannot Agree on the Neutral Appraisal?
If only one spouse wants an appraisal or they cannot agree on an appraiser, the parties do not share the cost of the appraisal. They each pay for their appraiser.
When there are multiple appraisals, if the amounts are within a reasonable range of each other, it’s best to just average the appraisals to settle the matter efficiently. If there is a substantial difference between the appraisals, the parties can have the two appraisers pick a third appraiser to decide the value, or spouses can negotiate another compromise. Importantly, if the court has to get involved, it can order a sale of any physical property if the parties cannot agree on valuation. That could have adverse tax consequences and should be avoided.
While valuations can be costly, they are also critical in divorce, because they provide both parties with the knowledge they need to negotiate a fair settlement.
When dividing property in divorce, it is important to consult an experienced attorney who can represent your best interests and help you achieve a positive result. Contact us for help with your divorce.