When it comes to property division, particularly in the context of divorce or the dissolution of a partnership, “Fair Market Value” (FMV) is an essential concept. Understanding FMV is crucial for ensuring equitable distribution of assets and can significantly impact the outcome of property settlements. CA Certified Family Law Specialist Judy L. Burger breaks down what Fair Market Value is, how it is determined, and its relevance in property division settlements.
What is Fair Market Value (FMV)?
Fair Market Value is defined as the price that a property would sell for on the open market, under typical conditions, and between a willing seller and a willing buyer, both of whom are informed and not under any compulsion to buy or sell. In simpler terms, it represents what a property is worth in the current market, reflecting its true value based on comparable sales and market conditions.
In property division settlements, particularly during divorce proceedings, assets need to be evaluated and valued to ensure that both parties receive a fair share of the marital property. Considering FMV helps in:
- Equitable Distribution: California requires the division of property to be “equitable,” meaning fair but not necessarily equal. FMV helps determine a realistic value for assets and guides how they should be divided.
- Negotiations: Having an accurate FMV makes negotiations more straightforward. Both parties can enter discussions with a mutual understanding of what properties are worth, making it easier to agree on asset distribution.
- Legal Proceedings: If a dispute arises and the case goes to court, the determination of FMV is often critical. Courts tend to rely on expert appraisals to establish FMV for assets involved in property division.
CA Property Division Attorney Judy Burger has a wealth of experience in dividing and valuing community assets and liabilities. With a keen eye for detail, she skillfully identifies separate property assets, ensuring that her clients’ individual assets are clearly acknowledged and legally confirmed. Judy has successfully navigated a variety of cases, specializing in the division of medium to large estates, where her expertise translates into effective and fair settlements for her clients.
How is FMV Determined?
Determining the Fair Market Value of a property may involve several methods:
- Comparative Market Analysis (CMA): This method involves comparing the property in question to similar properties that have recently sold in the same area. Real estate agents often conduct CMAs to estimate property values.
- Professional Appraisal: A qualified appraiser can provide an unbiased FMV assessment. To arrive at a value, they will consider factors such as property location, size, condition, and recent sales of comparable properties.
- Income Approach: The FMV of investment properties may be determined based on their income. This approach estimates the property’s worth based on its potential to produce income.
- Cost Approach: This method considers the cost to replace or reproduce the property minus depreciation. It’s often used for unique properties or those with few comparable sales.
Challenges in Determining FMV
While the concept of Fair Market Value may sound straightforward, various challenges can arise during its determination:
- Market Fluctuations: Real estate markets are dynamic. Economic conditions, interest rates, and other factors can affect property values over time, leading to potential disputes over FMV.
- Emotional Attachments: Parties involved in property division may have emotional attachments to certain properties, which can cloud their judgment regarding its FMV.
- Disagreements on Valuation Methods: Different methods of determining FMV may lead to varying results, and parties may disagree on which approach is most suitable.
Understanding Fair Market Value is essential for anyone navigating property division settlements in divorce or partnership dissolutions. It serves as a cornerstone for equitable distribution and ensures that both parties are treated fairly based on the actual value of their assets.
Learn More About Fair Market Value in a CA Divorce Property Division
Engaging an experienced and qualified Family Law Specialist like Judy Burger can help clarify the value of properties in question, making the settlement process smoother and more just. Whether you’re planning to negotiate a settlement or are preparing for potential litigation, a solid grasp of FMV will empower you to advocate for your interests effectively.
Ms. Burger has extensive relationships with Forensic Accountants and Actuaries, Litigation Real Estate Appraisers, Real Estate Attorneys, Business and Corporate Attorneys, Title Companies, and Real Estate Professionals who assist her in determining the FMV of properties during divorce proceedings. Contact The Law Offices of Judy L. Burger nearest you for more information and assistance.
Some divorces can be accomplished in what seems like a blink of the eye. Oftentimes, a young couple without children or assets to speak of simply needs to sign a few legal documents to go their separate ways. But as years go by and marriages get longer, divorces get more complicated as children are born and assets are accumulated.
Such was the case with Frank and Jamie McCourt. At the time of their divorce, Frank was the owner of the Los Angeles Dodgers. In determining Jamie’s stake in the family assets, Frank estimated the value of marital assets, including the Dodgers franchise, at roughly $300 million.
Eventually, the divorce was finalized in October of 2011and Jamie was awarded $131 million. Not exactly half, but not too shabby, either.
A mere six monthly later, however, Frank sold the Dodgers franchise for a whopping $2.15 billion. (That’s right, billion with a ‘B’). Jamie promptly took Frank back to court, feeling she had been cheated out of her fair share. Among other things, Jamie alleged that Frank grossly undervalued the business.
Situations like this are not uncommon, particularly when the marital assets include a business. An experienced and pragmatic divorce attorney understands the importance of a fair business valuation conducted by a qualified expert. Be sure your attorney is prepared with the facts so you can get your fair share the first time around.
If you feel like your spouse took you to the cleaners in your divorce, before giving up, consider your options for taking your ex back to court. At the