Divorce and Property Valuation During Covid-19 Pandemic

Passive Depreciation of Marital Assets During Divorce Proceedings

The three trends mentioned above -- spiking divorce rates, unstable asset values and closed courthouses, are creating a “perfect storm” that is greatly complicating the divorce process. Imagine trying to work out a property division agreement with your spouse while the value of your property is so unstable that you have no idea how much it will be worth by the time your property division hearing is finally scheduled.

Property Valuation and Economic Instability

When it comes to property valuation during the Covid-19pandemic, timing is critical. Suppose, for example, that when you and your spouse reached a property division agreement, the family home was valued at $220,000, and your stock portfolio was worth $235,000. Suppose that on that basis, you and your spouse agreed to a tradeoff where your spouse was to keep the house plus $7,500, while you retained ownership of the stock portfolio.

By the time the property division hearing occurs, however, the family home is still valued at $225,000 in a real estate market that appears stable; while the value of your stock portfolio has sunk to $160,00 in a Covid-19 bear market that shows no signs of abating. By this time, this deal you worked out might look considerably less appealing to you than it once did.

Court Discretion and the “Equitable Division Principle

Florida is not a community property state -- under Florida divorce law, the court has the discretion to select a valuation date of marital assets and debts that is “just and equitable under the circumstances.” With this power, the court can determine the date of valuation of assets that would be most appropriate to secure an equitable division of property.

The court might, for example, choose to accept the value of the house on the date of the initial property division agreement, while accepting the value of the stock portfolio on the date of the property division hearing. In that case you could be entitled to tens of thousands of dollars in other marital assets, in order to account for the difference between the value of the house and the value of the stock portfolio.

Court Closures and Alternatives to Litigation

If you cannot agree on property division, litigation may become necessary. If so, you can expect significant delays due to the Covid-19 pandemic, because Florida courts are closing their doors to all but “essential” functions. Although it is unlikely that a court will agree to resolve a divorce property division dispute either in open court or through an online platform such as Zoom, online mediation and arbitration are options if both parties agree to it.

For most couples, the best course of action would be to prepare carefully, keep informed of the fluctuating value of marital assets, and “wait it out” until the Covid-19 crisis either ends or moves into a more stable phase.

Provided by HG.org

Disclaimer: Every effort has been made to ensure the accuracy of this publication at the time it was written. It is not intended to provide legal advice or suggest a guaranteed outcome as individual situations will differ and the law may have changed since publication. Readers considering legal action should consult with an experienced lawyer to understand current laws and.how they may affect a case.

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