5 Things to Know About Valuing Marital Property in a Divorce

It’s one of the perennial questions of divorce: who gets what property?

“5 Things to Know About Valuing Marital Property in a Divorce” blog post photo.

Most family courts would prefer to see questions of property disposition handled through direct negotiation between the parties; equitably dividing a divorcing couple’s assets is a laborious and time-consuming process for a judge. Even in relatively amicable divorces, however, the opposing parties often place very different valuations on the various property that must be divided.

When direct compromise on property valuation and assignment becomes unlikely, it is often best for the spouses’ attorneys to try to work out a mutually agreeable deal. Ultimately, though, it may be up to a judge – and then out of your hands. Before that happens, here are five factors you should keep in mind.

Valuing marital real estate involves more than the current market value. Valuing a home or other real estate during a divorce is similar to the process a real estate professional undertakes when placing a property for sale. Typically, a comparative market analysis will draw inferences about the property’s value from the sale price of similar properties in the nearby area. Whether the property was purchased during the marriage also is important. If it was purchased before the marriage, both spouses may still have a financial interest. Even if one spouse owned the property individually at the beginning of the marriage, Pennsylvania law regards any increase in property value during the marriage as “marital property.” If you owned a $100,000 home at the time you married, and that property is now worth $180,000, your spouse is entitled to a share of the $80,000 increase in value. This is true regardless of whether you made improvements to the property during the marriage.
Property’s potential future value could have a bearing on the court’s decision. This is particularly true if the property was explicitly acquired as an investment during the marriage. An original piece of art, for example, may be worth only $500 today, but if an expert appraiser believes it could be worth $4,000 in 25 years, their testimony to that effect likely will carry weight during negotiations over equitable distribution. The $500 painting may be assigned a much higher value than a new $500 laptop computer, which essentially will be worthless in 10 years.
Money isn’t everything when assigning “value.” A judge may not acknowledge the intangible or sentimental value of any disputed property in a divorce, but you can and should. Being honest with yourself about what is important to you ultimately will reduce your stress levels and make the whole process a little bit less painful. Do you really want that ugly souvenir that your estranged spouse purchased on your honeymoon, or are you claiming it just to make them angry? If it’s the latter, take our advice as witnesses to many divorce cases: it’s not worth it.
You’re also dividing your marital debt. Responsibility for debt is as important a matter in divorce negotiations as ownership of property. Like property, debt incurred by a couple during their marriage is shared by both spouses. This is true even if one spouse incurred the debt entirely under their name. Unless the debt in question is clearly unrelated to the family’s expenses — such as, for example, an unfaithful husband purchasing expensive gifts for his mistress — both spouses will leave the marriage responsible for some of that debt. It is typical for a court to divide debt according to the respective parties’ abilities to pay it, but a judge is under no obligation to do so.
When negotiations fail to agree upon property valuation, consider hiring a professional. A professional appraiser will bring a dispassionate eye to the property at stake. Unencumbered by the emotional baggage of the divorce, an experienced appraiser also will be able to put a suggested price tag on every single piece of disputed property (and, in many cases, also will be able to facilitate their sale and liquidation, should that be necessary or desirable for both parties). The court may request the testimony of expert witnesses to help assess the value of particular types of property. An antiques dealer, for example, may be called upon to estimate the value of a piece of furniture or a coin collection.

Equitable distribution of marital property is one of the most common causes of divorce stress. The Philadelphia family law attorneys at Willig, Williams & Davidson can help. Call us at 800-631-1233.