Values in family mattersJoanna Craig
Values in family matters can mean those such as honour, dignity, trust etc and values as in terms of how much the property and other assets are worth.
Very often valuations are difficult to agree because of the breakdown in trust and communication that it is an inevitable part of divorce. It may also be caused by the fact that if there is not quite enough money to enable both parties to rehouse themselves or start again in a satisfactory way, then the value of the assets become critical and therefore hard to agree.
If for instance the wife wants to stay in the family home she may have to pay something to the husband to enable him to move on – how much she pays depends on the “value” of the property. But in reality it may depend on how much she can afford and how much she wants to stay in that house. It may also depend on how much the husband needs together with his earning and mortgage capacity to enable him to buy a suitable or similar property.
Even more problematic are business valuations. Very often only one of the parties will have been involved in the business and the other party may have an over inflated idea of what the business is worth. Just because the business has in the past generated a good income for the family it does not mean that either the business will continue to generate that income or that it is worth for instance three times the profit. These valuations are unrealistic. What a business is worth is what anybody is prepared to pay for it and they will weigh up the risk of taking on a new venture with or without the current proprietor and so a business valuation can be very problematic.
This difficulty can be very expensive for the parties. It can be the source of endless litigation which as everybody knows is very expensive, as well as emotionally damaging for all concerned, trying to establish exactly what the business is worth. One party will argue that it is worth a lot more than the other – but neither really knows. There is a strong argument for calling in experts early on. They can help, although they also cost money, in determining the value of key assets – the family home, a pension if it is of significant value and the business. If figures are agreed this makes negotiation much easier. Even if the figures are not particularly palatable to either or both parties, they are at least fixed and enable negotiations to take place.
Although valuations may be expensive when money is tight – as it always is when people are separating – it may actually be cost effective to get an early and professional valuation of key assets.
Pensions have what is known as a cash equivalent transfer value but any independent financial advisor will tell you that this does not necessarily mean what it says, there are some pensions which carry significant benefits within them which mean that the face value, the CETV is actually a significant under value. So again worth getting an expert opinion early on.
Sentiments I would also echo in relation to advice in relation to divorce and mediation too.
Expert valuations can provide clarity, not just in terms of actual price but also in explaining complex financial information or providing a professional judgement on the value of a key financial asset – particularly important if one asset, whether it be business or pension, forms a significant proportion of the couple’s total assets.
For more information or to discuss further please contact Nicky Gough on 07711 527968 or email email@example.com.