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Description Of What an Alternate Valuation Is in A Divorce
Upon the progression of the divorce into the discovery phase, where both parties must reveal their financials and assets for the determination of which assets will be counted as marital assets, a forensic accountant is tasked with appointing the estimated value of those assets and liabilities. However, the valuation process is or can be done on different dates so that the court can decide on the right estimation.
What is an Alternate Valuation Date?
Specific assets during a divorce process, such as a business and/or properties tend to increase or decrease in value since the date they were acquired leading up to the initial petition for divorce. It is also possible that a considerable amount of time may have passed since the divorce was filed, which means that marital assets must be valued at alternative dates for equitable distribution.
This is why a marital home may have to be valued after the separation was filed. Similarly, a business that did not become successful before the marriage but was successful post-divorce filing will also be valued at a different date or the date of separation.
In addition, an alternate valuation date is also important for another reason. Let’s suppose that a spouse has been living in their marital home during a long and contentious divorce, it is possible that they were intentionally negligent about the upkeep of the house, letting it fall into disrepair. However, the court could order an alternate valuation date before the house was thrown into disrepair, holding the spouse accountable for their actions.
When Should Alternate Valuation Be Used?
- When a business or property increases in value solely because of your efforts and not just because of general demand and supply.
- When both spouses were in a short marriage.
- When both spouses have a written agreement to use alternate valuation.
