Why are Valuations in Financial Proceedings Important?
The division of finances is arguably the hardest part of divorce proceedings especially when there are numerous capital assets involved. If either or both spouses own businesses or high-value assets, they will likely go under a financial microscope before being split at the conclusion of the divorce process. Independent valuation of assets and businesses is important to ensure the fair distribution of assets.
The majority of divorcing couples fail to reach an agreement when negotiating the division of assets and businesses. Therefore, hiring an independent valuation expert to calculate the fair market value of the assets is important in financial proceedings. Contrary to popular belief, valuing a property is no guessing game and should be professionally determined.
Both parties have to value their relevant assets and liabilities to provide complete disclosure of their financial circumstances, which is vital for determining the division of assets. Independent valuations allow the court to see the full financial picture and decide accordingly if the separating couple cannot agree on a division.
Valuation of Property During Financial Proceedings
It is fairly common for couples to agree on the value and division of the property or family home. Under such circumstances, the court has the power to order independent valuation. The valuation expert will provide an accurate valuation report to the court and both parties.
Considering the valuation report, the court will divide the property and one party may be awarded over 50% share depending on the financial contribution and circumstances.
Valuation of Business During Financial Proceedings
A valuation report for a business is usually prepared by an experienced accountant. Several factors should be considered for the valuation of the business. The report must outline the ownership interests of the parties, capital, assets, tax implications, goodwill, and liquidity of the business.
After knowing the accurate valuation of the business, both parties can negotiate better during the mediation meeting or court proceedings. The separating couple being made aware of the fair market value will likely reach a reasonable settlement.
Valuation of Pensions During Financial Proceedings
When a couple separates, the pension is considered a matrimonial asset and divided between both parties. If a couple fails to agree on how the pension will be shared, the court may order a pension sharing report by a pension actuary.
The actuary can contact pension providers to acquire a valuation known as Cash Equivalent Valuation (CVE). Depending on the pension arrangements, it may take longer to obtain a CVE.
Other assets
Lastly, the court may order the valuation of other capital assets to resolve the dispute between the parties. Valuation of assets is vital for reaching a fair and equitable agreement relating to the division of assets. Contact family practitioners and valuation experts to discuss the matter in detail.
Disclaimer:
The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Connaught Law and authors accept no responsibility for loss that may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please don’t hesitate to contact Connaught Law. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Connaught Law.
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