When married couples divorce, one of the most critical aspects of financial settlement is asset valuation. The family home is often the primary capital asset, but pensions, business interests, and other assets must also be considered. Given the volatility of markets and the importance of accurate valuations, it is crucial to follow the correct procedures to ensure a fair division of assets.
Disclosure of Family Assets
The first stage in financial proceedings during divorce is disclosure. Both parties are required to set out their assets, liabilities, and income, including their estimation of the family home’s value. If both parties agree on the value, this simplifies matters. However, if there is a discrepancy, a compromise—such as averaging the two valuations—may be proposed to avoid additional costs and delays.
If an agreement cannot be reached, a common approach is to obtain valuations from three local estate agents and use the average figure. In cases where further certainty is required, an independent valuation by a surveyor or expert may be necessary.
The Court Process for Valuation
If disputes persist, either party can apply to the court for a formal valuation. This involves submitting an application supported by CVs from three proposed valuers, including details of their fees and estimated timeframe for providing a report. The court will then select a valuer based on experience and cost-effectiveness.
Once an expert is appointed, they will conduct an inspection and submit a report, which serves as the valuation used in proceedings. While it is possible to challenge an expert’s findings, such challenges are rare and typically unsuccessful unless significant errors can be demonstrated.
Given the costs associated with court applications, expert fees, and legal processes, reaching an agreement without formal proceedings is generally preferable, especially in a fluctuating housing market.
Appointing an Independent Expert
Asset valuation extends beyond property and may include pensions, business interests, and other financial holdings. In many cases, both parties are advised to reach an agreed valuation to save time and costs. However, where assets are complex or market conditions are uncertain, an independent expert may be required.
Experts are jointly instructed and their fees shared equally. They must be impartial and possess relevant expertise, as challenging valuations is difficult once the process is underway. Choosing the right expert from the outset is therefore crucial.
Choosing the Right Valuation Expert
Different assets require different valuation processes:
- Property: Residential properties are typically valued by estate agents or surveyors, whereas buy-to-let or commercial properties may require an assessment of rental income potential.
- Business Interests: A forensic accountant may be needed to value business assets, determine the value of shareholdings, and assess liquidity to ensure any division is structured in a tax-efficient manner.
- Pensions: Pensions are complex, and their value cannot simply be divided in half. A specialist actuary may be required to provide accurate calculations based on the specific pension schemes involved.
Final Considerations
The purpose of asset valuation during divorce is to establish a clear financial picture, ensuring that assets are divided fairly according to legal criteria. While expert valuations can be costly, they are often necessary to achieve a just outcome.
For advice on finances during divorce, including asset valuation and protection, contact the Family Law team at DTM Legal by emailing family@dtmlegal.com or submitting an enquiry:
