Market Risk and Divorce

April 22, 2009

Market Risk and Divorce


One of the biggest issues in divorce involves the liquidity of the assets.  In a typical divorce, there will be a house, bank and investment accounts, and retirement assets.  The house and retirement accounts are not readily convertible into cash (especially in this market).  The bank and investment accounts are cash equivalents.  A good divorce settlement will attempt to match the needs of each party to the liquidity of the assets awarded to them in the divorce.  Thus, if one party will need cash to go back to school or fund a new home purchase, he or she should be awarded enough liquid assets to accomplish this goal.  At the same time, however, market risk is inherent in less liquid assets.  For example, until recently, real estate was a phenominal investment, but in the last year, prices have declined substantially, and there is a chance that it will be difficult to sell the home. 


Consider this extreme example of an unbalanced divorce settlement:  The comments to the story are also interesting reading. 

Jennifer Moore
Moore Family Law, P.A.
(763) 951-7330

Minnesota Family Attorney Discusses The Financial Recession of a Divorce 
Recessions are financially sobering affairs.  The value of your assets decrease while the uncertainty of your paycheck increases.  In a recession, you need to take charge of your financial affairs in order to ensure that you are not spending money needlessly. 

Divorces are no different.  The first step to a successful divorce is to gather knowledge about your finances.   Your lawyer will need your tax returns, bank statements, and credit card statements for the last three years.  She/he will also need current investment and retirement account statements.  If you claim a non-marital interest (because you owned it prior to marriage or it was bequeathed or gifted to you) in any financial account, your lawyer will need to see documents that reflect the value of the asset when you married or when it was gifted to you. 
Consider having your home appraised.  The cost of a home appraisal is minimal compared to the uncertainty of the market.  If you are cash strapped, ask a real estate agent to prepare a market analysis for you. 
If you have an interest in a defined benefit pension, you should know before you begin negotiations with your spouse that its present value may be higher than the value listed on your pension statement. 

Next, consider that you may be able to negotiate payoffs with various creditors.  You may be able to obtain a lower interest rate or some other concession that will reduce the financial pain that is inevitable when you split one home into two. 

It may be that you cannot obtain certain information from your banks and/or creditors, because the accounts are in your spouse’s name.  You may be able to obtain a substantial amount of information by looking around the house.  If not, do not despair.  Your attorney can obtain this information through a process called “discovery” where the other party is required to ask questions and provide documents requested by you.

Ultimately, however, the more work you do now, the less work your lawyer will have to charge you for. 

My favorite resource for financial advice is  You should be able to find a lot of tips there for lowering your monthly payments and negotiating lower interest rates, as well as reducing your debt, and obtaining the best customer service from unfriendly customer service professionals.


Jennifer Moore
Moore Family Law, P.A.
3350 Annapolis Lane North, Suite C
Plymouth,  MN 55447
(763) 951-7330
Fax:  1-(866) 354-3531















Agreeing to Valuation Dates

February 18, 2009

You and your spouse have been through counseling and some tough times, and you’ve come to realize that it’s time to separate, or even, divorce.  During this emotionally taxing time, you also have to start thinking about dividing your physical property. 


The property you have to consider dividing includes just about everything, including the kitchen sink.  It includes your home, cabin, cars, possibly a boat and a pair of jet skiis.  The property represents a lot of investment of time and money in physical objects.  Further, there are intangible assets that are literally investments, including bank accounts, retirement assets, and investment assets. 


Before the recent downturn in the economy, it was relatively simple to determine the value of individual property.  Your home could be appraised, and you could refinance the mortgage fairly easily to buy out one spouse.  You could look up the Kelley Blue Book value of vehicles.  You could talk to your Human Resources director to get a current valuation of your 401(k). 


That’s not necessarily the case any more.  It has gotten more difficult to value property that has significantly lost value over recent time.  Setting the valuation date becomes an issue to be fought over, as each of you want a more beneficial valuation date to maximize your share of the property. 


Minnesota statute sets the valuation date of property to be divided in the divorce “as of the day of the initially scheduled prehearing settlement conference.”  Minn. Stat. § 518.58, subd. 1.  It is possible, however, to modify that valuation date if “agreed upon by the parties.”  Id.  Further, the court may make “specific findings that another date of valuation is fair and equitable.”  Id. 


Ideally, you and your spouse should agree on a date to determine the values of all your property.  This may include talking to a real estate agent to discuss the value of your home, an accountant to determine the value of your physical assets, and a financial advisor to determine the best time to value your intangible assets.  The more you and your spouse can cooperate on this one issue as you move through the divorce process, the more you can save in attorneys’ fees down the road.