What Role an Appraisal Plays in a Divorce/Legal Separation

Most folks are familiar with what an appraisal in and of itself is -- a formal valuation of a certain asset. Well in dissolutions and legal separations, they are commonplace. So, if you are going through one of these kinds of cases and you have not come across one yet -- you still might.

But why are they used in divorces and legal separations in Colorado?

Good question.

Appraisals are used and needed when there is an argument about the value of an asset that is part of the marital estate. Remembering that in Colorado, the marital estate is defined as anything that came into the marriage outside of a gift or an inheritance. Even the scenarios of gifts and inheritance can become part of a marital estate in some instances -- be sure to consult with an attorney on that.

What this means is that instead of making a list of all the debts and all the assets in a marriage and dividing them out line-by-line, everything (both assets and debts) is included in a pool to be divided equally. In other words, it's not just Husband gets the house and Wife gets the retirement; Husband gets the Honda and Wife gets the BMW. The reason being that these items may differ in value or debt and that will impact the bottom line of each party.

In the car example above, what if the Honda is a 2025 and the BMW is a 1994? What if the Honda has a loan on it but the BMW does not? What if the Honda is in perfect condition, but the BMW requires a lot of maintenance and repair? This scenario points out that even though both parties would get a car, it doesn't mean that it is a "fair trade" necessarily.

When you have documentation that clearly spells out the value of an asset, an appraisal is not needed. For example, if you have a jewelry appraisal that is only a year old, it may still be relevant and reasonable to use that valuation for that jewelry. But for a house, the valuation can vary greatly. Not only that but the tools sometimes used in place of an actual appraisal can differ in considerable ways and may not be accurate. Using a Zillow or Redfin valuation of a home could be outdated and not take comparable properties in the area into account. A property tax invoice can have a value on the card that does not reflect any upgrades or renovations that the home has undergone.

If both parties agree on the value of any asset, even a house, an appraisal is not necessarily needed (though an attorney may still recommend one if they are doing their due diligence to ensure they are protecting your best interests. If you and your spouse both agree to use the Kelley Blue Book values for the vehicles, as often is the case, you can simply use those values for them.

Appraisals come into play when there is a disagreement on the valuation of an asset. Most people immediately think of a home appraisal and those are certainly the most common. However, any asset is subject to an appraisal in a divorce. This could include things like vintage cars, jewelry, firearms, Persian rugs, pension plans, business interests, artwork, and coin collections. In the fifteen years I was a family law paralegal, I've seen appraisals for everything.

As with anything there can be pros and cons for appraisals, and both are pretty obvious. The main pro is that the value of the asset is likely to be reputable and relied upon by the Court. Of course, there are situations in which one party agrees with the valuation, and another does not. There are ways to deal with this by way of a rebuttal appraisal. Largely though the value given from the appraiser is what the value is. The main con, of course, is that appraisals of any kind are going to cost money and they are going to take time. If you are tight on the budget for your dissolution or legal separation and/or are coming up on deadlines that you must adhere to, appraisals can be stressful.

When are appraisals implemented in a divorce or legal separation? This depends on the case. Typically, appraisals will come sometime between the completion of financial disclosures (about 42 days after the Respondent is served) and the closing of discovery before the Permanent Orders hearing (about 28 days before the hearing). (Here for a general timeline for these cases.) These can vary, but largely this is when you would expect to be talking about them.

If you plan on mediating your case, or are required to do so by the Court, you should have all appraisals completed with the valuations in hand before you attend mediation.

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