Stock Values Rising and Falling Affecting Investment Valuation
On which date a stock, fund or account is appraised for value can be a matter of conflict in a divorce where the parties have much to gain or lose. In high-net-worth divorces where the parties have liquid assets more than one million dollars and complex investments, the process of and date of investment valuation and division is significant. News and current events affect stock values. Market corrections and trends impact investment strategy. In divorce, the impending division of stock options and investments impacts how skilled divorce attorneys approach property division.
Community Property and Separate Property
Are your stock options and investments separate or community property subject to a division between spouses in a manner the court would deem right and just? Texas is a community property state.
Community property consists of the property, other than separate property, acquired by either spouse during the marriage. In Texas there is a presumption that property possessed by either spouse during a divorce is community property.
Separate property is property:
- owned or claimed by a spouse before marriage;
- acquired by a spouse during marriage by gift, devise or descent; and
- received as recovery for personal injuries during the marriage with the exclusion of recover for the loss of earning capacity.
Property Division in Texas
The general rule for property division in Texas is that, in a decree of divorce or annulment, the court shall order a division of the estate of the parties in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage.
Texas trial courts have discretion in determining the division of community property such as investment income and the date of investment valuation and appraisal.
Investment income and value that is not otherwise held as separate property, is community property to be divided in a manner the court deems just and right.
Your divorce lawyers at Scroggins Law Group are skilled in complex property division, complicated investment portfolio valuation and challenges to claims of separate property. Mark L. Scroggins is Board-Certified in family law in Texas.
Agreements Between the Parties on Valuation Dates and Appraisals
Many decisions in divorce cases can be made by the agreement of the parties. When the parties cannot agree, the court makes the decision for everyone. Most judges make it known that it is preferable for the parties to come to an agreement and not make the court decide what will happen.
When it comes to money and complicated investments, the parties may not like the court’s decision. If there is no agreement, the judge may simply rule that the date of the divorce decree is the valuation date for all relevant assets including investment accounts.
While it might not make a significant difference in some divorces, others may involve complex investment portfolios and their values might not be so easy to determine.
Who is Going to Appraise Investment Accounts?
Complex divorce issues including investment valuation are best resolved using experts. For example, a certified divorce financial analyst (CDFA) offers advice to men and women going through divorce and facing difficult decisions about money. High-net-worth divorce attorneys often know financial experts such as CDFAs and other experts who can give advice. At times, these financial experts can be qualified as experts with the court to give their expert opinions about appraisals and options to measure and split values of complicated investment portfolios.
Strategy to Buy the Other Spouse?s Share of Investment Values
When investments were acquired at one price and are part of a complex strategic plan, buying out the other spouse?s share makes sense. Choosing investment valuation dates, appraisers and procedures can be done by agreement between the parties. During the pretrial discovery phase of divorce, the parties exchanged information regarding investment accounts. When the community estate is determined and valued, the division of community property can proceed. If the parties do not agree to division, the court will order and divide the assets, including investment accounts.
If the investments are in a mutual fund the parties can agree to the value of the fund on the determined investment valuation date. If one spouse agrees to receiving half of the value of the fund, the exact dollar amount is easily determined on that date.
If the stock portfolio is more complex and there are stocks traded in several markets and funds, it is more difficult to determine the value of the investments without the use of an appraisal expert.
The expert can be called to testify as to how and when complex investments can be valued and how they can be divided in divorce.
Sophisticated investors might choose to agree to a valuation on the agreed date and buy the other spouse out, giving them money for their share of the investments from other sources, such as cash or other tangible assets, even a larger share or the entire marital home.
Experienced and Aggressive High Stakes Divorce Attorneys
Knowing how the process should work and anticipating twists and turns are very different things. The value of experienced and aggressive high stakes divorce attorneys is immeasurable when agreements are negotiated, and proper leverage is applied.
Mark L. Scroggins and his team of talented trial lawyers, paralegals and support staff at Scroggins Law Group in Dallas and Plano, are experienced in challenging high stakes divorces. For property division, and investments specifically, the process of appraising and negotiating a favorable outcome requires the right experience and connections to the right experts.
At Scroggins Law Group, Mark L. Scroggins and his team create specific strategies for clients to get the results they need. Mark is Board-Certified in Family Law by the Texas Board of Legal Specialization and has over 25 years of experience negotiating and litigating complex high net worth divorce and property division involving complex investments. Call Scroggins Law Group by dialing (214) 469-3100.