Understanding the importance of a valuation date in a divorce
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Understanding the importance of a valuation date in a divorce

| Sep 4, 2020 | Firm News

Your divorce proceedings in California will no doubt include a number of important milestones. One such event that many of those that we here at the Jabro Law Group assisted in the past expressed surprise upon learning was the valuation date of their marital assets.

You likely understand that your marital assets will be subject to property division, yet why would the date on which the court values those assets have any special significance? It is actually quite important given the prospect of asset appreciation (or depreciation).

Determining equitable division

When it comes to high-value assets, the court may divide them by allotting you a portion of their actual monetary value or an ownership stake. Say, for example, that you jointly own a valuable asset with your ex-spouse. Should your divorce proceedings take months (or even years) to conclude, the possibility exists that the value of that asset may increase from the date you choose to divorce until you begin to work through your marital property division. You will want to ensure that you optimize that appreciation.

On the other hand, what if your ex-spouse owns their own business? The prospect of your profiting from their business may prompt them to intentionally de-value you (thus decreasing your benefit from it). While such an action would impact them negatively, as well, any potential ill feelings they may have towards you (coupled with their trust in their own business acumen to turn things around after the conclusion of your proceedings) might push them towards it.

Valuing marital assets in California

Local lawmakers understand the potential for such chance. Thus, Section 2552 of the California Family Code states that the valuation of marital assets must occur as close as possible to the date of your divorce trial.

You can find more information on property division proceedings throughout our site.