The valuation of assets is crucial when you’re dealing with dividing them during a divorce. But how do you ensure you get it right? The DTM Legal team explains asset valuation during divorce.
Appointing an Independent Expert
Asset Valuation can include anything from the family home to pensions or a business interest. Usually, advice would be given to both parties to try and agree a valuation – this saves time and costs and helps reach a more amicable conclusion. However, in a lot of cases, this may not be possible. It may be that there is a volatile market or there is no updated information as to what an asset is worth. It may also be the case that prior to the disclosure process, you did not even know that the asset existed.
Valuation exercises will involve the appointment of an independent expert. They are instructed on a joint basis at joint expense to value the particular item. The identity of the expert is to be agreed as will their instructions. It is important that they are impartial and have expertise in the area. As a word of caution it is difficult to challenge valuations and therefore you need to ensure that you are happy with your chosen expert and the process as this moves forward.
Choosing an Expert for Asset Valuation
Different types of assets will require different experts and different valuation processes. For example, you may have a property that is the family home that requires valuation by a property expert. There may be a second property that is a buy-to-let or a commercial property which will need to have consideration given as to the income it produces. There may be more than one stage to the process of the valuation. If your asset base involves valuing a business or a shareholding in a business, then a forensic accountant will need to value the whole and then the particular share that you or your spouse own. For the purpose of looking at any settlement structure, the expert will also need to look at liquidity, i.e., what cash there is available now and over a certain amount of time so that you can see what can be taken out of the company as tax efficiently as possible. The income generating power over the forthcoming years may also be important.
Pensions are another area where very niche and expert actuaries need to be instructed. If you and your spouse have pensions you cannot simply add two fund values together and divide it by two to say that this is what you each should have. No two pensions are the same so an expert will be required to look at information from your pension providers and carry out specific and bespoke calculations for you.
These are just some of the more common assets to be valued but there will be many others. The aim of the exercise is to crystallise and have a figure in terms of valuation for each asset that you can then start to apply statutory criteria to in terms of how they are to be divided.
Advice on Finances During Divorce
For Advice on finances and divorce, valuing and protecting your assets please contact Helen Davies and the Family Law team at DTM Legal.
To speak to Family Law expert call 01244 354 800 or email helen.davies@dtmlegal.com.
