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Rombro & Manley LLP

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Why is the valuation date in your divorce case important?

On Behalf of | Jul 29, 2019 | Business Divorce

When preparing for divorce proceedings in Manhattan Beach, there are a number of important dates that you will want to keep at the forefront of your mind. One of these is the valuation date of your marital assets. You may at first question why the exact day on which your marital assets are appraised and valued would be important, yet in many scenarios (particularly if you or your soon-to-be ex-spouse are small business owners), this information could potentially help you from suffering a significant financial loss. 

Divorce often involves a good deal of emotion, and that emotion can conceivably manifest itself in many areas. Say that your ex-spouse runs a small business who operations you have contributed to. As the value of that business (or at least a portion of it) may be subject to property division, they might see an opportunity to purposely diminish your interest in it. The counterargument to this may be that by doing so, they also devalue their own stake in the business, yet depending on how they feel towards you (and the circumstances that contributed to the end of your marriage), they may be willing to accept the loss (knowing that once your divorced, they can start another business again in the same sector). 

What this all means is that the value of the business could be significantly different on the day your divorce becomes final than the day you chose to separate. Per Section 2552 of the California Family Code, the state sets your valuation date as close to time of your divorce trial as is possible. Thus, you want to ensure that while you are waiting for proceedings to commence, your ex-spouse does not purposely neglect or devalue the business.