If you are contemplating filing for divorce or at the stage of dividing marital property in a pending divorce during this turbulent time, let's examine your options. But first, some reality checks.
Reality Check #1. Many courts are closed or open only for emergency hearings with some holding limited hearings via telecom, though most judges will sign agreed temporary or final orders during this hiatus. Property conflicts have a lower priority than custody conflicts regarding the best interests of children. When the courts do reopen, count on their docket schedules being swamped for weeks or months to come.
Reality Check #2. One of the first steps in a divorce is to identify all marital assets and liabilities; next is valuing them. An underlying principle of marital property division— whether by a judge after a trial or by agreement of the spouses—is determining the fair market value (FMV) of each asset. FMV is defined as what a willing seller would pay a willing buyer, with neither having to sell or buy, and with both knowing all the relevant facts. These two italicized phrases are of paramount relevance for divorce valuations today.
Reality Check #3. How a judge may divide your marital estate carries substantial weight in the minds of those engaged in property settlement negotiations. In the current economic turmoil, driven by the COVID-19 pandemic, rest assured that judges do not hold crystal balls to forecast where our economy is going to land. In ordinary times they give weight to expert opinions when valuing and dividing marital property such as real estate, retirement benefits, and business interests. These experts include real estate appraisers, actuaries, brokers, accountants, brokerage analysts and economists. Presently experts are all over the map opining about when, how, and under what constraints our economy will recover after the pandemic peak wanes. Remember that the stability and thus predictability of our economy drives marital property valuation in normal times.
If you’re willing and able to wait for the dust to settle at some unknown point in the future, how do you protect your property interests in the meantime?
On the other hand, if you’re dead-set on finalizing your property division now rather than later, consider one or more of the following:
You may want to explore the option of mediation or a collaborative divorce. In a divorce mediation, a neutral, specially-trained third party (usually a family law attorney) helps spouses reach agreements on their divorce issues. In a collaborative divorce, the spouses contractually agree not to have a judge decide their fate, but instead agree to work through collaboratively-trained attorneys, mental health, and financial professionals to systematically navigate the issues.
Failure to collaborate can be short-sighted. Divorce battles are costly, not only in higher attorney’s fees, but they also work against asset preservation, which is more important now than ever. Both spouses should be invested in maintaining the value of the marital estate, no matter how it’s divided in the future.
Perhaps you are just now starting to contemplate divorce. You've had it being cooped up in isolation with your spouse, tempers have run amok, and tolerance is hiding in a rabbit hole. These domestic circumstances, coupled with the impact of the COVID-19 pandemic, do not present the optimum economic environment in which to make major life changes. Patience and measured decision-making may keep you from jumping into even more financial uncertainty.
If you have questions, you should reach out to a local divorce attorney for advice.