Appraisal Witness: Qualified Expert

Appraisal Witness: Qualified Expert

Archive for the Category 'Divorce Appraisal'

Divorce Pension Division

Wednesday, May 07th, 2008

Divorce Pension Division is always accomplished by an accredited personal property appraiser. Arriving at a fair split of the subject pension can only be done with a qualified appraiser determining the value of the pension at the time of the divorce.

Consider this hypothetical situation and the problems in determining a divorce pension amount. The recipient of the benefit began employment at 21, and is now 49. Their current pension plan allows them to retire after 30 years of service with a supplemented pension allocation. This means that the recipient is able to retire at 51 and receive an annual figure of $34,200 until they reach 62 years (when Social Security benefits commence). Once 62 years, they will continue to receive $17,100 annually, until death.

If, however, the recipient were to leave the company by the marital property accrual cutoff date at 50 years, with 29 years of service, their benefit entitlement would be $16,821 annually, commencing once they reached 65 years and continuing until death.
Depending on the approach used to determine the divorce pension amount, the amount allocated as the divorce retirement figure will be extremely different. If the divorce pension figure is decided by the deferred approach, then the non recipient will receive a divorce retirement settlement sum far below what the actual benefit will be worth.

The only time this dilemma does not present itself in divorce pension settlements is when the recipient is already retired, or if they have left employment. In all other situations, attorneys must confront this issue when determining a divorce retirement sum.
Where case law directs that you use the deferred vested approach to reach a divorce pension settlement amount, and you represent the non recipient, unless you can persuade the recipient to agree to a larger divorce retirement figure, the distribution of assets will be inequitable, but within the law.

Divorce Pension Division is one of the specialties of Durkin Valuation Associates. If the litigation involves a contesting of the Divorce Pension Division, Durkin Valuation Associates are expert appraisal witnesses giving irrefutable testimony to support our appraisals and valuations.
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Divorce Pension Settlement

Monday, April 28th, 2008

Divorce Pension Settlement can only be achieved with valuation, appraisal and then distribution. Divorce Pension Settlements takes a qualified appraiser with experience in divorce pension settlement valuations. The amount allocated as a divorce pension figure can also be further altered by a Qualified Domestic Relations Order. The divorce pension figure decided upon for the non recipient is based upon a concrete figure that doesn’t change from year to year, despite the fact that the amount is adjusted for the recipient, based upon inflation. So while a defined benefit plan may be the most valuable asset in a marriage, often, the divorce retirement figure allocated to be paid as the divorce pension amount will be far below what the recipient will receive once eligible to receive their benefit.

How Divorce Pension Amounts are Calculated
There are two main ways that a divorce retirement figure is reached by an appraiser. The approach used will depend upon case and state law, and the facts of each individual situation. And while both have their uses, neither is a great tool when deciding upon a fair divorce retirement sum.

    1. 1. Deferred vested pension appraisal “ this approach only takes into account the benefit earned up to the marital property cut-off date. This approach often leads to a divorce pension figure far lower the actual value of the pension, and can make settlement far more difficult if the parties are aware that the divorce retirement sum is inequitable.
      However, this approach does exist for a reason, and can be used in certain cases to reach a divorce pension settlement amount. If the recipient has lost the job, quit, or is likely to lose the job, then this is a suitable approach in allocating a divorce pension amount. It is also a fitting approach in reaching a divorce retirement sum if the recipient works in an industry where working breaks are normal and for a sustainable period (construction and entertainment industries are a good example). In these cases, it is difficult to conclude whether any further benefit will be accrued, so this approach is appropriate in determining a divorce pension figure.
      2. Matured full benefit pension appraisal  this approach assumes that the recipient will continue to work until their unreduced retirement date without any changes to their base salary from the marital cut-off date to the retirement date. The divorce pension amount is then derived by determining the full benefit amount and reducing it by a coverture calculation. This is usually a far fairer way of determining a divorce retirement sum.
      Where the benefit amount is speculative, due to the industry (such as construction and entertainment industries), a Qualified Domestic Relations Order can be used when determining the divorce pension amount.

Appraisal witness usually is needed in divorce pension cases as litigation seems to prevail when retirement benefits are divvied up. Durkin Valuation Associates are Expert Appraisal Witnesses who prepare every appraisal as if it will be challenged and need an appraisal witness to give irrefutable testimony in defense of the valuation. Call (617) 720-0332

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Divorce Appraisal of Business Assets

Saturday, March 15th, 2008

Divorce Appraisal of Business Assets is imperative to avoid much litigation. Divorce creates many problems, one of which is the division of assets. When business is involved, it can become even further complicated, which is why a divorce appraisal of the business should conducted during divorce proceedings. Even if the business is held in the name of a single spouse, if the business was purchased, financed or improved upon during the marital period, both parties are entitled to an equitable division.

It is not unusual for only one spouse to be actively involved in the business, which is why a divorce appraisal is necessary. Whether purposely or not, that partner will usually underestimate the value of the business. If the inactive business spouse fails to ensure that a divorce appraisal is undertaken, they may find in the future that they have not received a fair distribution of the marital assets. It is likely to cost you more financially to forego a divorce appraisal, rather than paying the upfront cost of a divorce appraisal to be conducted during divorce proceedings.

Cases over the years, where one spouse has taken the word of their partner about the estimation of a business, and failed to instigate a divorce appraisal, clearly demonstrate the risk you take in failing to ensure a divorce appraisal is undertaken.

A prime example is a case where the husband informs the wife that the business is worth 2 million. Wanting to get divorce proceedings over quickly, the wife agrees to a division of assets based upon the figure indicated by her husband. Once the divorce was finalized, the business was then sold for 12 million,  far more than the estimate originally given to the wife.
Had a divorce appraisal be conducted, this situation would not have occurred. And though a lawsuit can be brought against the ex-husband, it is unlikely to be successful when no divorce appraisal was undertaken during divorce proceedings.

To ensure that you don’t end up in the same situation, it is important that should you be undergoing a divorce, you seek a divorce appraisal to ensure that all assets are valued and distributed fairly. While you might believe that you are saving money by foregoing a divorce appraisal, it is likely that you will actually be losing money.

An accredited divorce appraiser will provide you with a detailed analysis and reports, which is important even during civil divorce proceedings. It is also possible to choose a joint appraiser, so that both parties are able to split the cost of the appraisal. In either case you will need an expert appraisal witness to give irrefutable testimony should the appraisal need to be defended.

Accredited appraisers will follow the USPAP 2012 rules and regulations when conducting a divorce appraisal, so even if two different appraisers were to conduct an evaluation of the same assets, the values they arrive at may not be exactly the same, but should be fairly close.

Whether it’s a corner store, or a multi-million dollar business involved, a divorce appraisal should always be conducted once divorce proceedings begin, to ensure equitable distribution occurs.

Durkin Valuations Associates Has:

  • Seven Senior Professional Appraisers Nationwide
  • 70 years combined valuation experience
  • Acreditations; ASA, NAPA, GPPA
  • USPAP 2012 – 2013 Cpmpliant
  • Qualified as EXPERT APPRAISAL WITNESSES

Give us a call at (617) 720-0332.

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