The Coronavirus Pandemic and the Valuation of Divorce Assets

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The Coronavirus Pandemic and the Valuation of Divorce Assets

Besides washing our hands frequently and considering wearing a mask when you go out in public, COVID-19 has impacted countless aspects of our lives. For one, the pandemic has significantly disrupted the US economy as well as weakened financial markets and caused the unemployment rate to go up substantially.

As far as Florida divorces and the equitable distribution of marital assets are involved, the valuation of assets is a critical role in the resolution of the end of marriages. If your divorce involves the valuation of businesses or other assets, the potential for unjust results exists given the significant economic disruption caused by the pandemic. This article briefly examines how the COVID-19 pandemic can impact the valuation of assets during a divorce.

The Role of Business Valuations During a Divorce

Many divorce cases involve the valuation of businesses that either were acquired or appreciated during the marriage. During a divorce, these assets are valued and distributed in a manner that the family law judge deems fair. To perform an accurate valuation, experts must be informed about the specific dates to be used for valuation. Consequently, this means that financial experts during a divorce only consider factors that existed at the time of valuation. 

How COVID-19 Could Impact Business Valuation

Some of the various ways in which the COVID-19 pandemic could end up influencing the valuation of assets include:

  • Businesses might have unexpectedly benefitted from the pandemic, and this income stream might be an unreliable amount to gauge future income.
  • Earnings and revenues might have decreased as a result of COVID-19 related closures and declines in business activity. 
  • It is difficult to predict when and if some businesses will reopen and resume the level of activity that they did before the COVID-19 pandemic. 
  • Questions exist involving the amount of assets and capital required to regrow businesses struck hard by the pandemic including what debt would be needed to repair supply chains and other associated costs. 

Ways to Avoid Valuation Injustices

Divorce courts in Florida are tasked with making decisions that are fair and right. Not to mention, the process by which Florida divided marital assets between divorcing spouses is referred to as “equitable distribution”. When tasked with considering a value that substantially gained or lost value as a result of the pandemic, courts would likely appreciate that equity would not be served by making a decision based solely on the asset’s value. 

To emphasize this point, it is sometimes possible to review the valuation expert’s report or ask the professional to include a reference to the impact that the pandemic had on the asset. Although it is not required, valuation experts sometimes choose to mention a subsequent event in a valuation report. If a valuation expert is not willing to discuss such an addition, it might be possible to pursue a motion with the court. 

Speak with a Knowledgeable Family Law Attorney

If you are navigating a Florida divorce involving the valuation of marital assets, it can help substantially to retain the assistance of an experienced family law attorney today.

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