By Elliot S. Schlissel
June 2, 2011
New York Domestic Relations Law §236 part b under subd. 4 paragraph B states “as soon as practical, as soon as a matrimonial action has been commenced, the court shall set the date or dates the parties shall use for the valuation of each asset. The valuation date or dates may be any time from the date of commencement of the action to the date of trial.”
Picking a valuation date can have a significant impact on the valuation of an asset in a divorce proceeding. In the past the courts generally used either of 2 dates to determine when to value an asset during the course of a divorce proceeding. The courts have generally used the date of the commencement of the divorce lawsuit or the date of the trial.
Courts have been concerned that the spouse who controls the asset might let the assets value be diminished during the course of the legal proceedings. This would cause the court to use the commencement of the divorce lawsuit as the date of the valuation of the asset.
In recent years, the courts have seen significant fluctuations in the value of publicly traded stock. In situations where the value of publicly traded stock has increased or decreased substantially, the courts have been using the date of trial to value this asset.
In a recent case, Butler v. Butler, the court valued the husband’s business as of the date of trial. In this case, the court said a valuation of the husband’s business as of the date of the initiation of proceedings would not result in an accurate equitable valuation. In Butler, the husband filed bankruptcy after the lawsuit started but before the date of trial.
The business assets were sold at auction in the bankruptcy. The court found that the filing of the bankruptcy was not an attempt by the husband to reduce the marital estate but were the natural circumstances concerning his business. Today it is extremely important that the court choose a valuation date regarding assets subject to equitable distribution which results in the fairest division of property between the parties. The judges in New York are keenly aware of the issues and strive to pick the fewest valuation dates regarding marital assets.
The Law Offices of Elliot S. Schlissel, located in Lynbrook, Long island, New York have been representing individuals in divorce proceedings for more than 33 years. The firm represents clients in both father’s rights cases and cases where mothers are seeking custody and equitable distribution of the marital assets. The firm can be reached at 1-800-344-6431.