DENVER ASSET VALUATIONS FOR DIVORCE

To distribute assets fairly, courts must know what the party considers marital and separate property. It is also important that they know the fair market value of each item. It’s left to the parties seeking the divorce to provide the court with that information. This information is what the court will use to determine what is fair and equitable. Further, it is what they will base the distribution on. 

If there is no professional valuation, the court will base their judgement on either party’s testimony. The court may also disregard personal testimonies and assign a value themselves.

Asset valuation is the process of determining the present value of assets. The purpose is to assign a market value to your property as it relates to the current environment. That way, in divorce cases, clients won’t get taken advantage of or receive an inequitable cut. They will know what their property is worth. 

For liquid marital assets, valuation is simple. This includes things like cash or bank accounts. It gets harder when other kinds of property come into play. Spouses may not be able to agree on the value of certain assets. That is where an experienced professional like one of our attorneys can help you.

Valuation should occur closest to the date that the divorce decree is signed. That way, the value of assets is closest to their true current market value.

There are several ways to go about valuing assets. This is to cover each different type of property. There must be different ways of determining value as it relates to the different variations of assets. The methods of asset valuation used in Colorado are as follows:

Assessed Values

• Assessed value is the dollar value given to a piece of property for tax purposes. 
• This tends to be an outdated method because it doesn’t consider current market conditions.

Book Value

• Most often used to reduce the value of a business. To determine book value, we subtract the value of total liabilities by the value of total assets. The difference is the owner’s net equity. 
• This method isn’t the most accurate way to assess the value of property.

Capitalization of Earnings

• Capitalization of earnings is a business-interest valuation method. It’s used to calculate the worth of anticipated profits. 
• To determine this, we multiply a capitalization factor by the current average net earnings. The capitalization factor comes from the expected worth or performance of a business in the future. 

Comparable Sales

• You might also call this method the “market comparison approach.” It compares the property or asset to the selling price of the same or similar assets. This is often used to assess the value of real estate. 

Liquidation

• Liquidation is most often used for business-related interests. This is the selling of assets assuming the business will dissolve upon the finalization of the divorce. This method might lead to a lower total value due to higher-valued items being difficult to sell for anything more than salvage or scrap value.