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Why does the valuation date matter in your divorce case?

Given the emotion that goes into a divorce in Hot Springs, one may easily anticipate tempers flaring over many of the aspects related to property division. You might not think that the date that your marital assets are valued is important, so long as they are valued at all. Yet as surprising as it may seem, the valuation date in a divorce case can become a hot-button issue (especially when there are a considerable amount of assets subject to appreciation and depreciation). 

How, you ask? Say your spouse runs his or her own business. At the time of your separation, business is booming. Yet dealing with the distraction caused by your divorce case (and all of the other elements associated with it) may cause him or her to neglect the company. If your divorce proceedings drag on for an extended period, by the time the date arrives to value the business assets, they may have depreciated significantly. 

On the other, imagine your investment portfolio contains stocks, corporate or government bonds, precious metals or other holdings that tend to appreciate. Accepting their valuation at the time you separated as opposed to the time that your divorce becomes finalized could mean that you lose out on their added value. 

Typically, many states have a set valuation date in divorce proceedings. According to the American Institute of CPAs, that date in Arkansas is the divorce date. However, the court tends to look unfavorably on parties that deliberately try to draw out proceedings solely for financial reasons. Thus, if it believes your ex-spouse is attempting to do that to profit (or keep you from profiting) off an asset due to the valuation date, it may choose to select a different date (such as the date you separated) in order to deter such action. 

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Tapp Law Firm | 424 Ouachita Avenue | Hot Springs, AR 71901 | Hot Springs Office Location

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