The more property that people share during marriage, the harder it tends to be when it becomes time to divide those assets during divorce. Contrary to what people often hear about community property rules, a straightforward 50/50 split of all marital property isn’t necessarily what happens during divorce.
Both judges dividing property in litigated divorces and spouses can set property division terms that are far from an even split. Spouses who have complex marital estates have a lot of assets to value and divide with one another. That process can be very difficult to complete. Spouses may find themselves disagreeing about what resources are community property and also what those assets are worth.
Ideally, they look to the current market to determine a reasonable fair market value for specific assets. Investments can be particularly difficult to address fairly during divorce negotiations, as their value can fluctuate from hour to hour and day to day. It is, therefore, important to think critically when establishing a valuation date for marital property, including investments, for property division purposes.
What is a valuation date?
As the name implies, a valuation date is a specific date set for determining the price of various investments, like stocks. That date is a firm set date at some point during the divorce process that ensures that both spouses have the same price point for all of their major investments.
The valuation date can apply to stocks, real estate and any other assets that may fluctuate in value as time passes. Some spouses use the date when one filed for divorce as the valuation date. Others look at when they started living separately.
Factors that may influence the best valuation date include historical trends and current economic circumstances. In scenarios where there are disagreements about property division matters, valuation dates are one of several tools that help reduce the conflict between spouses. No matter how stocks and other assets fluctuate in value, what matters for property division is the fair market value established on the valuation date.
Understanding the various rules that apply to community property division proceedings can be beneficial for those preparing for divorce. Valuation dates are one of the many details that can have a profound impact on the outcome of the process.