Stale Valuation Requires Remand for Recalculations: Pickens v. Pickens

One of the major issues that must be resolved before a divorce can be finalized concerns property division. However, when property that fluctuates in value is involved, division can become much more complex — and it may be necessary to obtain a valuation. A recent case heard by the Missouri Court of Appeals analyzed the issue of when a marital property valuation should occur during divorce proceedings, finding that the court is required to value property at the time of trial. In the event a property valuation is not “reasonably proximate” to the time of trial, it may be rendered “stale” by the time the case is tried.

How is Property Divided in Divorce?

When it comes to property division, Missouri is an equitable distribution state. This means that marital property is divided between spouses in a way that is deemed fair — property will usually be divided equally, but the court has broad discretion to distribute property in any way it deems appropriate. Only property and assets acquired during the marriage (regardless of which spouse acquired it) are subject to division in divorce. Any property owned by either spouse before the marriage is considered separate property and belongs to the original owner.

Under Missouri law, a judge would consider a variety of statutory factors when determining property division during divorce, including the following:

• The economic circumstances of each spouse at the time the property division is to become effective
• Each spouse’s contribution to acquiring the marital property
• The value of nonmarital property belonging to each spouse
• The conduct of the parties during the marriage
• Custodial arrangements for minor children

Notably, spouses are free to divide property in any manner they choose during divorce proceedings. Mediation and the collaborative process are efficient and cost-effective alternatives to litigation that can help spouses resolve property division issues amicably. If spouses cannot reach a settlement agreement concerning how to divide their assets, a court would have to decide the issue applying the above factors.

How is Property Valued in a Missouri Divorce?

All property must be valued in a Missouri divorce proceeding before it can be divided between spouses. Specifically, property is valued based on the fair market value on the date of trial. There are a variety of ways property can be valued in a Missouri divorce, depending on the nature of the asset. A court would consider real estate appraisals for homes, business valuations for companies, and financial statements for investments.

For complex marital assets that fluctuate in value, it may be necessary to bring in valuation experts who can best assess how much the asset is worth — and help ensure each spouse receives their fair share. For instance, the value of stocks, bonds, mutual funds, investment accounts, 401(k)s, business interests, and real estate can change substantially, based on market conditions. With these types of assets, it’s critical not only to assess the value correctly, but also to determine a specific date for valuation.

What Did the Court Hold in Pickens v. Pickens?

In the case, Pickens v. Pickens, a couple that had been married for 20 years was divorcing. One of the issues at trial concerned valuing the husband’s 401(k). While the husband contended that it should be valued as of the date of separation, the wife argued that it should be valued as of the date of trial pursuant to the relevant case law and Mo. Rev. Stat. § 452.330. Although the trial court found in favor of the husband, the appellate court agreed with the wife, holding that because the 401(k) valuation occurred seventeen months prior to trial, it was “already stale by the time of trial.”

The appellate court held that the appropriate date for valuing marital property in a divorce is the date of trial, rather than the date of separation. Citing long standing precedent, the court reasoned that property valuation should be “reasonably proximate” to the date property is divided in order to be effective. It noted that market conditions and changing economic circumstances could change the value of assets valued earlier. Accordingly, a later hearing at the time of division would be necessary to determine the value of marital property in the event property division is not reasonably proximate to the time of trial.

The appellate court remanded the case to the trial court for recalculations.

Contact an Experienced Missouri Divorce Attorney

If you are facing divorce, it’s essential to have a skillful divorce attorney who can help you achieve the best possible outcome. Divorce and family law attorney Mark A. Wortman is dedicated to helping his clients navigate the divorce process every step of the way. Offering diligent representation to clients in the greater Kansas City, Missouri area for divorce matters, including those involving property division, Mark is dedicated to obtaining positive results in every case.

Schedule a confidential consultation to learn how attorney Mark A. Wortman can assist you with your divorce matter. Please contact him today online or by calling (816) 523-6100.