Dividing assets in a divorce can be complicated and contentious for several reasons. One such reason is valuation disputes. Assigning value to a property is critical to ensuring parties get a just and equitable settlement, but spouses can disagree on what properties are worth.
Why do people disagree?
There are several reasons divorcing spouses do not see eye-to-eye on property valuation.
- Emotional attachments: Property sometimes has sentimental value that inflates the actual valuation. A family cabin, heirloom jewelry or collectibles are some examples of property that can complicate division because one person may think they are worth more than the other person thinks.
- Complex properties: Valuating assets like bank accounts or cars is generally straightforward. However, assigning value to properties like a business or intellectual property can be a far more complex process, requiring an advanced financial understanding and knowledge of appraisal systems.
- Unique assets: Valuing property often involves comparing it to similar properties. For instance, if someone wants to know what a lawn mower might be worth, they could look up similar items for sale on sites like Facebook Marketplace. However, if a property is unique, there may not be sufficiently similar items to compare it to, complicating the valuation process.
- Different approaches: Parties can assign value to a specific property in different ways. There are various formulas, systems and strategies that may work but don’t reach the same conclusions.
For these and other reasons, people can get confused and angry when trying to value property. They can wind up misvaluing property or getting so overwhelmed that they make unwise decisions that affect their settlement.
Overcoming valuation disagreements
Parties with complex or significant assets still deserve a fair settlement regarding property division, but it can take more work.
There are a few options divorcing spouses can consider to overcome the valuation challenges:
- They can decide on a formula or approach to use ahead of time.
- They can work with trained, neutral professionals to set the valuations.
- Individuals can hire their own professionals to conduct independent valuations, then negotiate discrepancies in mediation or court.
When property valuations are in question, getting to a fair outcome can take more work. Understanding why this happens and what parties can do to resolve these matters can be crucial.
