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Using a professional appraiser in a divorce

On Behalf of | Oct 12, 2020 | Divorce |

Every Florida divorce involves the division of the couple’s assets. For some couples, with low net worth, dividing assets is a minor matter, but for couples with a high net worth, the proper division of their assets can become a major issue. The process of dividing assets usually begins with a valuation of those assets. If the valuation is sloppy or erroneous, the divorce process can be significantly delayed or become acrimonious. One way to avoid this outcome is the retention of one or more professional appraisers.

Valuing real property

Appraisers have many different skills, but the most common type of appraiser in divorce is one who specializes in valuing real property. For couples whose major asset is the family home, a reliable appraiser can be essential to a proper division of the marital estate. Real property appraisers have three approaches to value: replacement cost approach, income approach, and fair market value approach. Replacement cost is rarely used for residential property because such property usually appreciates and the replacement cost may provide a value that is too low. Residential property rarely produces income, and that approach to value is unusual. Most real estate appraisers use the market value approach, which requires the appraiser to identify sales of similar properties and to determine market value based upon the prices of these properties.

Valuing a business

If an appraiser is asked to value a business, the appraiser will ordinarily use the income approach to value. In this approach, the appraiser determines the annual income production for the property at issue and then calculates the present value of annually income, usually for a period of approximately 10 years.

Miscellaneous types of valuation

Other types of assets such as rare antiques or works of art require other techniques to establish value. Some assets have their value determined by exchanges; the most obvious example is shares of publicly trades companies.

Working with an appraiser

In order to facilitate a complete and accurate determination of value, the divorcing spouse must provide a great deal of information, such as acquisition date, purchase price, construction cost, depreciation and the like. An experienced divorce attorney can assist a party in assembling this information and providing it to the appraiser.

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