"Q. The value of our home and stocks fluctuate up and down with the market. How can we determine the value of these assets? How would that impact my divorce settlement?"
A. One of the many challenges for divorcing couples revolves around valuing marital assets with ever-changing values. Specifically with stocks and/or investment assets that change price each day, best practices are to divide those proportionately assigning an agreed-upon percentage to each party. This approach allows each spouse to share proportionately in movements in price that are up or down.
As it pertains to the primary home or other real-estate assets it can require a bit more work. While homes can be sold, accurate market prices are not readily known or available. In some cases the divorcing couple may agree on a using a single home appraisal to determine the value and move on. Other times up to three separate appraisals are used in an attempt to arrive at an accurate and agreed upon price. Regardless of the methods used, having an agreed-upon value is important in moving forward with settlement options.
It is also important to understand how the division of volatile assets in a divorce might impact the divorce settlement. Having clear expectations is crucial. In some cases, due to the waiting period before the divorce becomes final (90 days in some instances) the value of assets could have moved dramatically. By dividing the assets proportionately each party know he/she will receive a certain percentage but equally important is having realistic expectations about how much (or little) the asset in question could change. In cases involving extremely volatile assets, one spouse may prefer not to participate in the change in price and instead opt for an alternate division of property.
Adam Waitkevich is a Certified Financial Planner practitioner that founded Divorce Financial Solutions in 2010. Adam is also the President of Stone Harbor Trust, the sister company to Divorce Financial Solutions. Adam is a frequent speaker on investment-related topics and regularly instructs family law professionals in advanced divorce finances.