Generally, when a court values community property, it looks at all of the parties' (both husband's and wife's) assets and liabilities. We call this the "community pot". The value of a property in a community pot is determined on the date of divorce.
To measure the value of a property, we have to determine what kind of property it is. Is it a bank account? Is it a real property, such as land or a house? Is it a vehicle? Is it a retirement account, such as an IRA or a 401(k)? Is it a personal property, such as jewelry, artwork, pots and pans, etc.? You will hear lots about the fair market value (FMV) of a property. The definition of FMV is the price a property will bring when offered for sale by someone who wants this property but does not need to sell, and purchased by someone who wants the property but does not need to buy. If you think about this definition, it does not evoke an intuitive understanding of the concept of FMV. So, the courts have set up some general guidelines for valuation of property.
The following are some examples of how properties are valued:
1. If the property is a bank account or a retirement account, then those accounts are based upon their face value, i.e., the current balance in the account.
2. If the property is a vehicle, then we look at the fair market value (FMV) of the vehicle by looking at valuation services, such as Kelly Blue Book or NADA.
3. If the property is a personal item, such as a bicycle or a workout equipment, then the value of those items are based upon garage sale value, i.e., what someone would pay you for those items at a garage sale.
4. If the property is an artwork that the owner believes to be worth more than garage sale value, then the owner should have the artwork appraised to prove its appraised value.
5. If the property is a piece of land or a house, then its value can be determined by either the appraisal from the county in which the land or house is located or a formal private appraisal or a combination of both.