Washington State’s divorce laws require that the trial court justly and equitably distribute the spouses’ property and liabilities, whether community or separate. That property will include real estate, which must be valued to figure into a just and equitable distribution of property. The parties will not be likely to agree on the worth of the property. The party that wants the asset wants it to be worth virtually nothing, while the party giving it up wants it to be worth the universe.
So, the court must determine how to reach a fair valuation. The court must award each party an asset of roughly equal value each time it makes a distribution. It can only do this if it can determine the value of those assets.
In Washington, the value of property is a question of fact. This status means that the trial court’s asset valuations will be affirmed so long as they are based on the evidence presented in the case. Generally, a challenger will review the record to determine whether substantial evidence exists to support the court’s valuation of a particular asset, reviewing it in the light most favorable to the party in whose favor the findings were entered. Substantial evidence is sufficient to persuade a fair-minded person.
The most common valuation used in divorce is “fair market value” (FMV). FMV, in Washington State, is the amount of money a willing but not obligated purchaser would pay an owner willing but not obligated to sell, considering all uses for the property. In other words, FMV is the price objective persons in the marketplace would agree upon for a given asset.
However, the court is not locked into using FMV. Deciding value is at the court’s discretion and is usually set at the price for which a spouse could sell the asset.
If the disputed asset has significant value and the parties are widely apart in their respective valuables, a joint appraisal may be obtained, with either party entitled to a second opinion if dissatisfied. Accredited appraisers may be the best option, especially with real estate.
In the end, the valuation must be supported by evidence and, hopefully, by an appraisal. This objectivity will be helpful in the emotional context of a divorce.