17 May How to determine the value of assets for a Family Law property settlement?
Determining the value of each of the assets in the asset pool is an essential step to resolving family law property matters. Often placing a value on all of the assets can be a significant cause for dispute between the separated parties.
There are different methods of valuing different assets, we will touch on a few of the common matrimonial assets below:
Real Property (Land/Houses and Buildings)
To many Australians the family home has a value beyond the dollar signs. There are often many years of memories and sometimes hours of personal labour put into the property’s renovations. The home is often the most valuable thing that parties will own and it is important to make sure that you get the value right, especially if one party seeks to retain it.
The most accurate way of valuing a property of course is to sell it. This is not the first preference for most, as a sale would result in additional costs and possibly all parties needing to rehouse or find alternative accommodation.
Even if parties agree to the value of their home it is important to ensure that they have an accurate understanding of the true value of the property.
The most effective way to do this is to get the property valued by a real estate valuer. This will cost between $500 and $2000, however when dealing with the biggest asset in the pool, this money is often well spent.
Parties often refer to real estate market appraisals and bank valuations for a free assessment of the property’s value, however these sources are not nearly as accurate as they are are compiled by interested parties. Bank valuations tend to be lower as the valuation is conducted for the banks risk assessment purposes.
In relation to the value of a business, an important factor is what would somebody pay for it? However as a business may be the sole income source for at least one of the parties, a sale is rarely appropriate.
Often a business valuation will be required to accurately determine the value. Business valuations tend to be more expensive than real estate valuations and often require a longer time frame to be completed.
Parties may look to an accountant to provide an indication of the value of the business. It is important that the accountant is jointly appointed by the parties and independent if they are going to express a view as to the business’s value.
The most common approach to valuing a motor vehicle is to use a site such as Redbook.com. Ensuring that the same method is used to value all vehicle’s in the pool is important, such as the median private sale price.
Home Contents & Jewellery
When placing a value upon items like jewellery and furniture, the family law courts tend to adopt a conservative approach. The value they adopt will be the second-hand sale value of the items, not the value that it was purchased for or its replacement value.
If there is a dispute regarding the value of home contents or who is to keep what, a two-pile method can be used to split the home contents between the parties. In this method one party will make two lists, each with half of the contents of the home on it. The other party then has the first chance to choose one of those lists.
The valuation of superannuation interests varies depending on the nature of the fund. In an accumulated interest fund, determining the value is easy as it is displayed on the yearly statement. However, in a defined benefit scheme the value of the interest for family law purposes is not recorded on these statements. A Family Law valuation is required to be undertaken by a properly qualified accountant or sometimes by the fund, in accordance with the methods set out in Family Law (Superannuation) Regulations. The valuation of Self Managed Super Funds will be dependent on the nature of the funds assets, and may require the assistance of an expert such as an accountant.