Valuing Assets in a High Net-Worth Divorce
A complex divorce tends to center around conflict and is related to two key issues — parenting responsibilities and property division. Both parties have a lot at stake and are invested in each matter. Hence, each party has much to lose if the outcome is not in his or her favor.
Specifically, with regard to property division, the number and type of property that is potentially subject to division can require a complicated analysis to determine if the property qualifies as marital and what the likely value is for that property. While one spouse may think he or she has a complete picture of all the property owned by the other party, analyzing and verifying the information listed in the mandatory financial affidavit must serve as the starting point for division.
The issue of property valuation is particularly important in divorces where considerable wealth has accumulated during the marriage. Securing proper valuations of all marital assets is crucial to ensuring that the division of property is fair and will provide the income/financial resources as intended.
Parties are often encouraged to negotiate their own agreement on property division and other divorce issues. However, a Court will step in to settle certain matters if the parties cannot agree, or if the Court believes the proposed agreement is inequitable. Consequently, understanding how a Court assesses property division concerns allows divorcing spouses to better know what to expect if conflict over property division emerges.
Property Division Generally
Illinois uses the notion of equitable distribution to control property division in divorce. Equitable distribution requires a Judge to divide marital property based on what is most just, which is not necessarily equal.
The first step in this assessment is determining which assets and obligations qualify as marital property. The Court’s power to distribute property is limited to those considered part of the marital estate. Marital property is generally considered to include all property acquired by either spouse during the marriage, both jointly and separately.
Illinois law requires the Court to weigh a number of factors in an evaluation of what would constitute a just division. Factors include the following:
- The contribution of each spouse to the acquisition and increase in the value of marital property, including services rendered as a homemaker;
- Whether either party wasted or dissipated assets;
- The age, health and employability of each spouse;
- Whether a property award is in place of spousal maintenance (support); and
- The length of the marriage.
As noted above, the fairness of a property division is tied to the value assigned to the marital property in question, which is easy for some assets like bank accounts, life insurance policies or investment accounts. However, situations quickly become complex if there is property with fluctuating value to evaluate, such as real estate and closely-held businesses — i.e., family-operated businesses. Obtaining these values require appraisals and valuation reports from experts, which the parties can use to negotiate a fair market value, or leave for the Court to decide.
Thus, a key issue in property division is the date the valuation occurs and is subsequently recognized by the Court. In Illinois, the Judge has discretion to use the trial date, a date selected by the parties, or any other date the Court chooses to set. Still, Courts tend to require parties to leave this issue until the very end of the case. As a result, updated valuations may be necessary as the case progresses, and the last-minute introduction of new property could cause delays as valuation experts are consulted. Working with a divorce attorney experienced with complex asset divorces is crucial to ensuring the property division granted is truly fair.
Talk to an Illinois Divorce Attorney
If you have questions or concerns about the division of property in your divorce, consult a skilled Palatine divorce attorney to learn how your specific situation fits within the parameters of the law. The Law Office of Nicholas W. Richardson, P.C. is experienced in all aspects of divorce, including those related to property division. Attorney Richardson knows how to arm you with the information needed to negotiate a fair settlement or present arguments in Court. If you live in northwest Chicagoland, contact the office today for a free consultation.