Child Custody And Divorce: Free Legal Advice
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Assets get valued in two ways:
The first question is always "What is this asset worth today?" That means "fair market value". You can quibble quite a lot over just what is, and what isn't, "fair market value", but it means, generally, "What would this item sell for, today, in an arms-length transaction between a willing buyer and a willing seller?"
The second question is always "How should this asset be divided in the marital estate?" It may be true that, as to this particular asset, one party will get 90%, and the other party 10%. That's NOT the same as saying that one party will receive 90% of the whole marital estate, and the other party only 10% of that estate. No indeed, we're talking about one particular asset here.
Let's deal with "fair market value" first. Normally, it's valued as of the date of filing of the complaint, or valued as of when it was very obvious that the marriage was over (such as the day he beat her up, took all the money, turned off the utilities at the marital home, and left, never to return, even if he or she didn't get around to filing the complaint until six months later). There can be real issues as to which of several dates to use, and please remember that the legal standard the judge will use is "equitable" or "fair" as to each issue, and that's it. The judge has a lot of room to maneuver, to get to an equitable result, and that means that there is some flexibility built into the process, and you have to be aware of it, both for trial purposes, and for negotiating purposes.
Some examples:
1. The marital home. The judge (and the lawyers) will want to compute the EQUITY in the home, which is the value of the home, less the debts against it. In the typical case, that means the mortgage, and maybe (make that MAYBE) a home improvement loan or two. It seldom includes the cost of commission for sale, unless the house is actually sold, at which point all of the closing costs come out. Here are three examples of the same home.Worksheet
2. The automobile(s). They are frequently a wash, they frequently have no value, especially the newer ones. Again, they are going to be valued at FAIR MARKET VALUE. That can be easily computed using the middle of the blue book values. (The 'blue book' is frequently available from your banker. Why? It's the bankers that make the car loans, and the bankers need the most up-to-date information on changing values, don't they?) There are usually three values listed for each auto: retail, wholesale, and loan value. Your typical 1995 Chevrolet Beretta 2-door coupe might be listed (in November, 1996. Will it be worth less next year? Are you kidding? It will be worth less next MONTH) as follows:
Retail: $ 9,400
Whols : $ 8,800
Loan V: $ 8,000
That means that if you bought this car off of a used car lot, you'd be paying retail, and you'd be charged the retail (higher) figure. If you wanted to sell this car to a dealer, say, on a trade in, or for cash, you might receive the wholesale figure. The bank will loan you a bit less than that, on this car. It's the middle figure that the judge will likely use for 'fair market value'.
Now SUBTRACT WHAT IS OWED ON THE CAR to value the car in your divorce case. Value of 1995 Chevvy Beretta: $8,800, LESS $9,100 owed to your local bank. It's not an asset, is it? It's a liability. It's value is less than zero, it's value is a negative number (negative $300, in this case). Especially just about one year after your purchase of the car, the value of the auto has dropped far more than the amount the last year's worth of payments has actually reduced what you owe on it. You are what the dealers call "upside down" in that car, in that you owe more than the car is worth.
Which is not very serious, in that you need a car, and you like this one, and you plan on paying for it, but DON'T let the other side flim-flam you. "He's got that $16,000 Riviera, judge". Horsefeathers. He's got a car that's worth, today, $14,600, and he still owes $15,450, your honor. He's entitled to a SUBTRACTION from his column if he keeps this car, isn't he?
3. Pensions. Value them as of retirement TODAY (or some other significant date: the date of separation, the date of the filing of the complaint, not what the monthly payment will be after you retirement, two (or fourteen) years from now. You go to your retirement/personnel office (or your attorney writes to that office if the other party has the pension) and request, IN WRITING, an estimate of pension beneifits. "If I retired today, November 1, 1996, what would be my retirement benefit?" The letter you get in response will be used to value that pension, and compute the FAIR MARKET VALUE of the pension. More details on this in the chapter on pensions.
4. Other assets. I can't, obviously, list every kind of asset here. But if somebody is wanting it, it's probably got some value. If so, it gets valued at FAIR MARKET VALUE. That likely means that you have to hire an expert, usually an appraiser, to testify as to what that FAIR MARKET VALUE actually is. Now that can be expensive, but your lawyer can reduce that cost considerably, by use of the discovery procedures we discussed earlier, such as the REQUEST FOR ADMISSIONS. Or, you might end up with a settlement conference, a meeting in one of the lawyers' offices, with the express intention of putting a value on a particular asset, like a coin collection, and hash it out, and everybody gives a little, gets a little, compromises, and you end up with a value on that coin collection that's agreed upon by both sides. It's a lot cheaper than hiring a damn coin expert, and paying him by the hour to testify, and paying your lawyer by the hour to listen to him, isn't it?
Good luck with it.