Why is the Date of Valuation Important?

March 1, 2012

In fact, in our experience, it seldom is. But when there are unusual circumstances, the date of valuation can be as critical as the Standard of Value imposed.

From time to time we see a case where the managing spouse has taken covert or overt steps to affect the value of the community-owned business adversely. The dentist, for example, who reduces his case-load voluntarily, or the contractor who delays signing contracts until after the trial to divide the community. Other times, we see the case discussed by the Court in Duncan, where the value of the business increases owing to the efforts of the managing spouse. In these fairly rare circumstances, the value of the company can vary substantially between separation and trial.

As a practical matter, it is a good idea to have your appraisal expert value the company at both dates of valuation, especially where the date of value has not been decided in advance.

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