Dividing Assets: Determining Marital Asset Value in a Colorado Divorce

One step of the divorce process is to create a list of your and your spouse’s assets and debts so they can later be equitably divided. Dividing assets you and your spouse built over the life of your marriage requires expert guidance.

As you assemble this list, you will want to consider things such as:
  • Which assets are part of the marriage and which are separate?
  • How much are the assets worth?
  • Should you challenge your spouse’s assets valuations or designations?
  • Is your spouse disclosing all of his or her assets, and if not, what do you do?
  • Which assets are really important for you, so much so that you will fight for them in court?

Having an experienced divorce attorney on your side will help you determine the answer to the questions.

dividing marital assetsMeet with a Divorce Attorney about Dividing Assets

Our experienced Family Law Team can guide you through the financial disclosure process and ensure that your dividing assets is equitable.

Call 303-688-0944 to set up a free initial consultation with one of our knowledgeable and compassionate divorce attorneys, or schedule a meeting online when you click here.

Our divorce attorneys will help you make sure all of the appropriate assets are included in the portfolio, including:
  • Real Property
  • Personal Property
  • Investments
  • Employment Income
  • Income Bonuses
  • Outside Income

How Courts Value Marital Property

One of the court’s main objectives during a divorce is dividing assets. Often when people think of dividing assets, or anything for that matter, they may dividing something equally. In Colorado, though, assets are divided equitably; debts, too. Equitable does not mean equal.

Equitably dividing assets means the court must have a clear picture of which assets the parties consider marital property* and their values.

After determining what constitutes the parties’ marital property, called the marital estate, the court looks to the divorcing parties to provide the information required to determine the fair market value. The court will base its decisions on the fair market value of the property when dividing assets.

The property will be valued as of the date the court signs the divorce decree, or the date of the property disposition hearing if the decree is signed after the hearing date.

The court’s determination of an asset’s fair market value only needs to reasonable in light of the evidence presented to avoid appellate review.

The court can base its valuation on limited evidence, such as the parties’ testimony and financial affidavits if no other information is presented.

You & Your Spouse Must Provide Asset Information

Both parties are responsible for providing the court the information relating to the value of the marital property, and each party has the option to provide its value of any marital asset.

However, even if both parties present evidence on the value of marital assets, the court may disregard on one or both values and determine the value on its own as long as the court’s value is reasonable and supported by evidence.

Agreeing to a Stipulated Value

In some instances, the parties may decide to agree to some or all of the assets’ fair market value. This is called stipulating value.

An Upside of Stipulating Values

Stipulating the value of assets can avoid the cost and time required to go to court to argue the value of the assets.

It is important to know that if you decide to take this route, the agreed upon value must be current so it meets the court’s duty to value the assets as of the date of decree or disposition hearing. In other words, you cannot over or under value the assets.

What Stipulated Value Does Not Mean

Just because you and your soon-to-be ex-spouse may agree to the value of assets does not mean you must agree to all the other issues related to those assets.

For instance, agreeing to the value of an asset does not mean you have to agree to how much each of you contributed to its purchase, upkeep, or appreciated value. You also do not have to agree on whether the asset is considered separate or marital or how it will ultimately be divided.

Valuing Separate Property

Property presented as separate property must be valued as part of the court’s determination of the equitable division. The asset’s value prior to the marriage and its current value is required to determine the increase of the asset’s value, if any, during the marriage.

While the asset itself may be the separate property of one party, the increase in its value during the marriage may be included in the marital estate.

Dissipated Assets

A spouse dissipates assets when they intentionally get rid of assets to deprive the spouse of that asset when a divorce is looming.

A dissipation claim can be made if the spouse squandered away marital money as the marriage was breaking down or if a spouse misused money during the marriage that was not spent for marital purposes.

If the spouse accused of dissipating assets cannot prove that the funds were legitimately spent, a judge can adjust how the assets are divided to counterbalance the misused money.

Valuation Methods

No single valuation method will cover every type of property. There are a number of accepted valuation methods Colorado courts use to value marital property. Their use is mainly dependent on the type of asset and the available information.

Comparable Sales

Comparable sales is also referred to as a market comparison approach. It’s frequently used for real estate valuation.

Comparable sales compares the asset to prior recent sales of the same or similar assets.

This valuation method does have its drawback, including the timeliness of recent sales and what the evaluator defines as comparable sales.

For real property, real estate agents are frequently used to determine the property’s value. Do not rely on tax appraisals or outdated valuations.

If the real property is claimed as separate property, a historical valuation will be needed to determine its value prior to the marriage.

Assessed Value

Colorado statutes define how and when the government values real property — such as homes, undeveloped land, and some personal property — for tax purposes. This value is known as the property’s assessed value.

Assesed value is not used very often in divorce cases because the assessed value can be based on outdated information and it tends to ignore actual market conditions.

Liquidation

Liquidatin is most applicable to business interests. It assumes that the business will be dissolved due to the divorce proceeding and that the business’s assets will not be sold together as an ongoing operation.

Liquidation frequently results in a lower total value because many items with higher value in an ongoing business would be difficult to sell for more than scrap or salvage value.

Capitalization of Earnings

Capitalization of earnings is another business-interest valuation method. It assumes the business will be sold as a whole and possibly continued after the sale.

The business’s market value is determined by multiplying its average net earnings by a capitalization factor. This reflects a reasonable rate of return after taking into account current interest rates and the risk associated with the business’s market.

The liquidation method almost always requires expert testimony.

Book Value

Book value is another business-interest valuation method.

The owner’s net equity is determined by subtracting the business’s liabilities from the value of its assets.

The use of this method has a number of drawbacks in a divorce:
  • Business record inaccuracies can easily result in erroneous asset valuations or liability amounts.
  • The value of tangible assets is generally determined by subtracting an asset’s tax depreciation deduction from its purchase price. However, the depreciation deduction rarely corresponds to an asset’s actual decline in value.
  • It frequently excludes substantial intangible assets, such as goodwill.

Book value is most commonly used by a party to minimize a business’s value.

The valuation of assets in a divorce is not unlike determining their value in other settings, such as selling homes or businesses. There aren’t any legal formulas or algorithms like you see in child support and spousal maintenance instances. The courts are looking for reliable methods and accurate and current values.

Set Up a Free Case Assessment 

It’s important to protect your interests in your divorce. We can help you get through the financial disclosure process to ensure all of your assets are accounted for and that they are appropriately valued.

Call 303-688-0944 to set up a free initial consultation with one of our knowledgeable and compassionate divorce attorneys, or schedule a meeting online when you click here.

* The terms asset and property are used interchangeably unless the property is referred to as real property, which indicates real estate, such as houses and land.

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