Dividing property in a California divorce requires more than deciding whether an asset is community or separate property. When a community asset will be awarded to one spouse rather than divided equally in kind, the court generally needs to determine its value so the overall community estate can be divided equally.

California generally uses fair market value when valuing marketable property. The timing of that valuation can also become important, particularly when an asset changes significantly in value while the divorce is pending.

Fair Market Value Is the Starting Point

For California divorce property division, the value of a marketable asset generally refers to the highest price that would be agreed upon by a willing seller who is not under pressure to sell and a ready, willing, and able buyer who is not under a particular necessity to purchase.

This concept can apply to many assets that must be valued before they can be awarded to one spouse.

If one spouse will retain a community asset and the other will receive different property or an equalizing payment, an accurate valuation helps determine whether the overall division is actually equal.

Valuation is also generally necessary when one spouse will purchase the other spouse’s community interest in an asset.

Not Every Community Asset Requires a Formal Valuation

Some methods of property division make valuation unnecessary.

For example, if spouses own 100 shares of community stock and each spouse simply receives 50 shares, there may be no need to establish the stock’s value for purposes of dividing that particular asset equally in kind.

Similarly, valuation generally is not required when a community asset will be sold and the proceeds divided equally.

An asset that will remain jointly owned by the spouses in equal shares also may not require valuation for the immediate division.

The need for valuation therefore depends partly on what will happen to the property.

California Usually Values Property Near the Time of Trial

California generally requires community assets and liabilities to be valued as near as practicable to the time of trial.

Importantly, “trial” for this purpose means the proceeding at which the property is actually divided.

That distinction can matter when marital status has already been terminated through bifurcation but property division remains unresolved. The relevant valuation date generally relates to the later property trial rather than the earlier proceeding that ended marital status.

California courts can use an alternative valuation date when good cause supports doing so.

Changing Asset Values Can Affect the Final Division

A lengthy California divorce can create substantial valuation issues.

Businesses may grow or decline, real estate markets may change, and investment assets can fluctuate while the case is pending. A valuation prepared early in the divorce may therefore not necessarily represent the value that should ultimately be used when property is divided.

Understanding both what an asset is worth and when it should be valued is essential to accurate California property division.

For spouses dealing with valuable real estate, businesses, investments, or other significant community assets, valuation can directly affect how much property each spouse ultimately receives.