January 07, 2010 (Original publish date) • By Dennis Beaver
Part 1
“I am in the middle of a horrible divorce where we are spending huge amounts of time on trying to come to agreement on the value of all the things acquired over a 20-year marriage,” Mary Anne wrote. “Things are probably worse because I was the one who left after discovering that my husband was a middle-aged version of Tiger Woods.”
“We are spending a small fortune in attorney fees, fighting over everything in the house, and this can’t go on. Neither I nor my husband seems to be getting much help from our lawyers in learning how to arrive at a fair value. Can you provide some guidance? Just how do you figure out what things are worth? I am so tired of hearing that so many of the things I’ve been collecting for years is just junk and has no real value, but he thinks his rusting 1985 old high school Ford is worth a fortune!”
What is value?
“Think of the stuff that we acquire,” Aleza Tadri commented when I read her Mary Anne’s e-mail. “Placing a value on stuff — all those things we acquire,” is exactly what she does in New York, as a personal property appraiser at Appraisal Services Associates. I recently had the chance to interview Aleza and Charles Rosoff, president of Appraisal Services Associates, who are both serving as general editors of the extremely interesting book, “Valuing Specific Assets in Divorce,” published by Wolters Kluwer Aspen Publishers.
The advice they provide to the wealthy of East Coast America about what things are worth also applies to the rest of us. Charles and Aleza were generous with their time.
This week and next, You and the Law will share with you their tips on how to save money — and your sanity as well — when going through one of life’s most difficult moments.
“Your reader is asking very good questions, and, like so many people in a divorce, is probably being pulled in several directions. Do I want this item? If I let him have it, what should I get in return? How can I avoid being taken to the cleaners?” Charles explained. “Everything we have has a value. But what is its value? Our job as professional appraisers is to demonstrate how we determine value, and why it is so important to understand these concepts, especially in a divorce.”
Emotions and value don’t mix well
“The word ‘value’ has no real meaning unless we qualify it by stating the type of value, such as fair market. The type of value is also affected by where the item is sold. For example, take a car. If you go into a dealer and want to buy it new, it will have a higher price than if the same car were to be sold by you to a used car dealer a year later, or if you try to sell it to a private buyer.”
“Your husband’s 1985 high school car has virtually no value as it is probably seen as scrap and an old car by most people, unless it was maintained with original equipment and can be considered a collectible. Then, it is not simply an old, used car. However, unless maintained in such manner, his emotional attachment to the vehicle will not be reflected in fair market value. He needs to understand this important concept.”
“There are different markets for that car, which look for different qualities; for example the collector’s market that places a premium on originality. So the market where it is being offered for sale will have a significant impact on its value.
Charles continued, noting that in his experience, “courts traditionally are generally looking at what we call fair market value. But this can be different numbers for the same property, depending on the market level one examines. For example, when sold at an auction, a painting can sell for a fraction of its retail cost when first sold by an art gallery.”
Don’t get caught up in replacement cost
Most importantly, Charles and Aleza describe how, “when stuff is reduced to cash, the division is most efficient. For people getting divorced, you need to pay attention to how much can you sell property for, as opposed to replacing. Some people will dwell on the cost of replacing the item — refrigerator or couch — instead of focusing on the amount of cash they can get if they sell the item, divide the proceeds, and move on with their lives.”
Next week: “Tricks of the Trade.” How to accurately and fairly determine for yourself what much of your “stuff” is really worth.
Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.