THE HIGH ASSET DIVORCE CASE: VALUATION OF COMPLEX ASSETS SUCH AS BUSINESSES AND RETIRMENT ACCOUNTS POSE A SPECIAL CHALLENGE FOR PRACTITIONERS.
With the increase in the number of millionaires in the country, it is no wonder that there is a corresponding increase in high asset divorces – both in the US and abroad. The
problem challenge of how to accurately value complex assets such as businesses, real estate and retirement accounts cannot be understated.
The cliché advice that parties in a high asset divorce need an expert in the field of asset valuation to determine the value of these complex assets, is a good starting point. But valuations are not scientific and can be challenged. One expert could use different metrics (or the same metrics) and reach diametrically different conclusions about the value of the asset.
It is imperative that the right valuation date is used in valuing the assets in a high asset divorce. Most often than not, the date of separation will be the controlling valuation date, but that can be disputed and you should check your state laws since valuation date varies by state. When dealing with real estate the key is to look at the property values at the date of the separation but if the values have tanked since then and are significantly different at the time of divorce, this obviously could be a problem or issue to be negotiated.
When you are a party in a high asset divorce, figure out your endgame before even talking to your attorney. Sure, your attorney can help you figure out what is possible with your end game and along with other experts can help you be better prepared to negotiate in a high asset context. But you should also know your own goals as far as what you would like to have and achieve with the division of property in your own marriage.
The so called “high asset divorce” includes complex assets include deferred compensation, real estate, pensions, stock option plans, profit sharing accounts, businesses, Roth IRAs, 401ks, etc. These could be locally held as well as internationally held. No question that having assets in foreign jurisdictions adds to the complexities of not only valuation, but location as well, and for the local divorce court to establish jurisdiction over the res.
No question that valuation of complex assets is a “hotly contested” area of divorce practice and a lucrative one for sophisticated lawyers since it can also be time-consuming, and…complex.
At the end of the day, the courts will try to do what is fair as far as division of the properties are concerned.