How to Determine the Value of Possessions in a Divorce

Arizona is one of nine community property states in the United States.  This means that in Arizona, property is held equally between the spouses in a marriage.  During a divorce, the court will attempt to divide any marital property as equitably or fairly as possible. 

This process starts with the court, or spouses themselves, identifying each asset as marital or separate property.  Most separate property is property obtained by either spouse before marriage.  There are some exceptions that an experienced family law attorney can explain in further detail.  

Once property is identified as marital property or belonging to the marriage, it must be valued before it is divided.  There are several ways to determine the value of marital property in a divorce.  

There are three types of marital property: real property, tangible property, and intangible property.  Real property includes the marital home, land, and other real estate.  Tangible property is physical property including, but not limited to:

• Furniture;
• Clothes;
• Appliances;
• Jewelry;
• Stocks; and
• Retirement accounts.

Intangible property includes intellectual property and those items that are patented, trademarked, and copyrighted.

Determining the Value of Real Property

Professional appraisers and some real estate agents will determine the value of a marital home or other real property using a Comparative Market Analysis.  This takes comparable listings and sales into account in the same neighborhood to estimate a home or property value.  

When evaluating a home or property for value factors including the following must be considered:

1. Appreciation and depreciation during the marriage; and
2. Any Improvements during the marriage.

Determining the Value of Personal Property

Typically personal property is valued and divided between spouses using one of the following methods:

• Personal opinion, personal valuation, and trading;
• Appraisals by experts, then trading items until approximate dollar amounts are reached by both spouses;
• Spousal offers to buy or sell items to one another for a specific amount of money; and
• Having a third party, such as an arbitrator or a judge, decide.

Spouses may use the cost approach, market comparison approach, or revenue approach to value personal property before exchanging or dividing that property.  

• The Cost Approach.  The property is valued at the cost it would take to replace the property;
• The Market Comparison Approach.  For items not easily replaced, the comparison approach finds similar items recently sold and draws a value based on the price brought by those items; and
• The Revenue Approach.  For property worth more in the future, an appraiser may calculate that property’s ability to generate revenue in the future.

Determining the Value of a Business 

If a business is marital property, it may need to be valued for spouses to determine if one party should buy the other one out of the business, if the parties want to run the business together, or if the business needs sold and the profits shared.  

Usually a forensic accountant values a business by reviewing its:

• Assets and debts;
• Profits;
• Increase in value during the marriage (if applicable);
• Depreciation; and 
• Appreciation.

Determining the Value of Intellectual Property

Equitable division applies to all marital property, including intellectual property.  Royalty-generating items are a type of business income and divisible under Arizona law.

When dividing intellectual property, it is vital to employ an experienced family law attorney to help find experts who can value the property and devise a way to best split the assets.   

There are special considerations family law attorneys use when determining how to divide intellectual property, such as:

• If the current and future value of the intellectual property is estimable; 
• If one party wants to keep the intellectual property royalties whole; 
• If the parties can split ownership of the intellectual property and royalty rights per allotted percentages until the asset depletes.

When parties cannot resolve their issues independently with the help of their attorneys, the court must intervene.  The court may make decisions on their behalf with which the parties may or may not be pleased.  This is especially true of items with sentimental value.  Therefore, it is best to resolve any issues without the court’s intervention when at all possible.

For experienced help with your property valuation and division, call the family law attorneys at Wilson-Goodman, PLLC.  Our Chandler divorce attorneys are available to help you weigh your options when determining debt and asset division. 

Wilson-Goodman, PLLC, will aggressively defend your right to marital assets in negotiations or court.  Call us in Maricopa County today and schedule your confidential consultation.