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Why is the valuation date in your divorce important?

The moment that you and your spouse choose to divorce in Rockwell, the value of your marital assets suddenly becomes very important. Your opinions with how much your assets are worth may differ from those of your soon-to-be ex-spouse, which is why the court will often rely on independent parties to perform valuations during divorce proceedings. Yet more important than who is valuing your marital assets may be when they are valued. 

Why would the valuation date have such significance? Imagine that your spouse established a business (with your assistance) during your marriage. Given your role in getting the company off the ground, you may be entitled to an ownership stake in it. Yet if tensions between you and your ex-spouse are high enough, they could reasonably attempt to sabotage or neglect their business in order to keep you from profiting from it. 

For this reason, some states set the valuation date during divorce proceedings as the date a couple separated, thus eliminating the incentive to intentionally de-value an asset. Maryland, however, does not. According to the American Institute of CPAs, the state lists the date divorce proceedings begin as the valuation date. Knowing this, you will want to be vigilant to ensure that your ex-spouse maintains any assets they have control over in their current good condition. 

One other reason to work to keep your ex-spouse from neglecting a marital business asset is that enterprise goodwill is divisible. “Enterprise goodwill” refers to the reputation of a company. Thus, both you and your spouse can benefit from the business’ association of top of its tangible assets. This fact may even serve as a reason why your ex-spouse should not allow the value of such assets decrease, as they are also hurting themselves by doing so. 

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