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December 27, 2010

The importance of the valuation date in dissolution of marriage actions

desktop stock screen board.jpgIn every dissolution of marriage action, marital assets must be identified and valued. The critical question that is in dispute often times becomes as of what date are those assets to be valued?

Section 61.075(6), Florida Statutes (2004), provides a bright line rule for classifying marital assets and liabilities. Absent a valid separation agreement, the cut-off date for classifying marital assets is the date of filing the petition for dissolution of marriage. Schmitz v. Schmitz, 950 So.2d 462, 463 (Fla. 4th DCA 2007).

Often times, it is a much easier task to identify those assets which are marital, then it is to value them. The case of Odak v. Vitrano, 35 Fla. L. Weekly D1957a (2010) is instructive on this point.

Another point of contention in this case involved the severance payment received by the husband. That payment was substantial. However, since the right to receive the payment did not come into existence until after the date the petition for dissolution of marriage was filed, the court had properly classified the severance payment as a non marital asset.

In this case the husband was an expert in "turning around" troubled companies. He was hired by Wild Oats Markets, Inc. as its president and chief operating officer for a number of years. He had received stock options from the company which he exercised during the marriage. The trial court chose to value those assets as of the date of the trial, as opposed to the date of filing the petition for dissolution of marriage.

The stock that the husband received apparently grew in value by a considerable amount between the date of filing the petition for dissolution of marriage annd the date of trial. The husband had argued that the increase in the value of the stock was occasioned by his post petition efforts to make the company more efficient and profitable, and therefore the proper valuation date should have been the date of filing the petition for dissolution of marriage, rather than the date of trial. It would have been unfair for the wife to benefit from his efforts made after the date of filing.

Although his arguument was very logical, the court sided with the wife with this issue, since there was conflicting evidence presented at trial as to what exactly was the cause of the stock rising in value. The trial court is afforded a wide latitude of discretion, and unless that discretion is abused, the decision cannot be reverersed on appeal.