Choosing a Valuation Date of Marital Assets in Dissolution of Marriage Cases: Perlmutter and its Permutations

This article will explain how Florida law has changed over the years regarding how to value assets in a divorce. Before 1988, the date for valuation was decided case by case. In 1988, a new law said the valuation date should be the date of a separation agreement or the date of the petition, unless the judge decided otherwise. This law was changed in 1994 to say the valuation date should be the date of the agreement, or another date made clear in the agreement, or the date of the petition. The judge can also decide on different valuation dates for different assets. In Florida, when it comes to figuring out the value of assets in a divorce, the decision of when to value those assets is up to the judge. This means that the judge will decide whether to value the assets at the time the divorce papers were filed or at the time of the trial. A case called Perlmutter is the most important decision when it comes to this question. In that case, the court decided that the trial date was the right time to value the assets, not the date the divorce papers were filed. This was because there was a long time between the filing of the papers and the trial, and the value of the assets had gone up a lot during that time. So, for people getting divorced in Florida, the judge will consider all these things before deciding when to value their assets. The principles from the Wegman case are now used as the standard for analyzing this issue in Florida and across the country. The court found that in many cases, it’s fair to value marital assets close to the time of the trial to ensure a fair distribution. However, in some cases, it may be justified to use a valuation date closer to the start of the legal action, depending on the circumstances. Ultimately, the chosen date must reflect the goal of fairly dividing the marital assets. Courts use three different dates to value marital property: the separation date, petition date, and trial date. They choose the date based on which party’s actions caused the change in value of the asset. If one party’s actions caused the change, the earlier date is used to reflect that party’s benefit or loss. If the change is due to market forces, the trial date is used, and the increase or decrease in value is split between both parties. This approach is seen in the case law after the Wegman and Perlmutter cases. In Florida, courts use the separation date as the valuation date when one spouse’s efforts alone are responsible for the increase in value of an asset. The petition date is used when one spouse’s efforts cause a significant change in the value of the asset. This ensures that the responsible party benefits from the increase or decrease in value. It’s important to consider both dates when determining the value of marital assets in a divorce. The trial date is used as the valuation date in divorce cases because it’s fair to divide any increase or decrease in value of assets between the two parties. For example, if a retirement account goes up in value between when the divorce is filed and when the trial happens, that increase should be shared. In some cases, the trial court has made mistakes in valuing assets, like in one case where a husband’s retirement account was valued at the wrong date and the court didn’t explain why. This is important because it affects how much each person gets from the divorce. In Kelly v. Kelly, the court found that the trial judge had the discretion to choose the date of the dissolution trial as the focal date for determining marital assets and their values. This was because the husband had control over the assets from the time of separation to the trial. When determining the date for valuing marital assets, the court considers the cause of increase or decrease in value between the date of separation and the date of trial. If the change is due to passive forces, both parties share in the change, and the later date is used. If the change is due to active forces, the earlier date is used to hold the responsible party accountable for the change in value. Attorney David L. Manz specializes in complex family law cases and is board certified in this area. He works at Greenman, Manz, & Ables, P.A., and is well respected in the legal community. He has a lot of experience and is a leader in his field. This column is written by the Family Law Section, with Thomas J. Sasser as the chair, and Susan W. Savard and Jeffrey A. Weissman as the editors. Their goal is to teach lawyers about their responsibilities to the public, make the legal system better, and improve the study of law.

Source: https://www.floridabar.org/the-florida-bar-journal/choosing-a-valuation-date-of-marital-assets-in-dissolution-of-marriage-cases-perlmutter-and-its-permutations/