Valuing assets is not always easy or obvious. During the divore and separation process, you will need to value these items in order to properly divide your assets. Here are the top-5 most commonly asked questions about valuing assets.
Valuing Assets: The Matrimonial Home
There are normally two options for valuing assets like the matrimonial home during the divorce and separation process. If you and your spouse intend to sell the home to a third-party, the value of the home will be whatever you can sell it for. Start by getting an idea of what other houses in your neighbourhood are selling for at Realtor.ca
Most people do not realize that you will want to make sure to have your Separation Agreement completed before selling the home, as your real estate lawyer will hold the proceeds in trust until the separation agreement is finalized.
If you or your spouse are buying the matrimonial home from the other, the value of the home will be based on a formal appraisal from a certified Home Appraiser (which is different than a realtor).
Be aware that if you intend to arrange a mortgage for the purposes of refinancing, each bank will typically have their own list of Home Appraisers, so it may be prudent to arrange for the appraisal to be done by the bank you are receiving the mortgage from so that you do not have to pay for the appraisal twice.
A licensed mortgage broker or your Bank will have a list of specific appraisers on each specific lender’s approved list and will help you choose one that is local. This ensures that the home appraiser is up-to-date on your neighbourhood factors and houses like yours, that may affect a home’s value.
A licensed appraiser will determine the value of the home. In Canada, there are two bodies that license and educate appraisers. They are the Canadian National Association of Real Estate Appraisers and the Appraisal Institute of Canada. Members of both associations are recognized by banks, credit unions, mortgage lenders, and mortgage insurers.
Valuing Assets: Your Vehicle
Valuing your vehicle should be based on the Canadian Black Book, or a similar service offered online. Canada Black Book has a car valuator that will let you know the true current value of your car. Another option for getting an idea of the value of your car, is to look at what your car is worth on Auto Trader.
Valuing Assets: Your Pension
To properly value the amount of your pension that accrued during the time of your marriage, you will need to find the true value of the pension, which is different than the values on a Pension Statement.
This is done by ordering a “Pension Valuation for the purposes of Family Law” from your pension plan administrator (usually through your Employer’s Human Resources department.) The pension plan administrator may charge a fee for this service.
Valuing Assets: Your Business
There are different types of businesses for the purposes of family law. Some businesses have residual value and some do not depending on the type of business and the roles of the owner. A quick rule of thumb is to ask “whether the business would make money if the owner was not there?” Where necessary, you should contact a formal business valuator that can assist you in making a valuation of the business based on the business’ financial statements.
Valuing Assets: Household Items
Generally for the purposes of separating household assets, personal items are not valued at the price that was originally paid for that item. Instead they are usually financially valued at “garage sale” values. This does not mean that an item does not have great emotional value, such as an heirloom, or that it does not have real value, such as a rare painting. These items are exceptions and should be treated on a by exception basis.
How to Avoid A Messy Divorce
- Seriously consider mediation before lawyer litigation
- If at all possible, stay out of the Family Courts
- Gather and organize your financial documents
- Do your homework, understand how divorce works in Ontario