Valuation & Division question

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Background: Married ~25 years. Separated ~1 year. No kids. My wife had a lot of BPD symptoms, was always high functioning, and did some serious personal work after I made it onto these forums, and hasn't been abusive toward me at all, even during our split. This is really more like a "normal" amicable divorce than a BPD divorce, and certainly not a high conflict divorce.

Residency is complicated by me living on a boat and her traveling, and not having a place she pays rent on or owns for herself. We both claim legal residency in WA, so if specific state law matters on any of this, that is where to look.

We've agreed to split things 50/50, and my wife proposed the valuation to me; I am about to get back to her on it. There are two sticking points, that I would like advice on:

1. Basis for valuation of the boat. It was jointly purchased and worked on together. My wife valued it based on the actual purchase costs plus money sunk into it for improvements. (Not putting a value on either of our labor)

I believe that it should be fair market value, what somebody would agree to buy it for, which is SIGNIFICANTLY lower.

(Other items that I ended up with seem to be valued at low-end replacement cost for her, but it is small enough change that I'm not wanting to make it a fight)

2. IRA/Pension accounts. We both worked, we both have them, but my wife is a few years older than I am, and ended up with more in her IRA, and also has a small pension/annuity that will give her monthly payments in a decade.

She says that hers are hers and mine are mine.

We have both retired (very young for that) and are living off other investments (with a very little bit of paying work on occasion) and were always planning on living together off these investments for another decade or two until we started dipping into the IRAs. Prior to the split, we had no separate finances at all.

I believe that the retirement accounts are common property as well, and need to be considered.



The next step is my counter-proposal on valuation, and then we come up with some kind of agreement and split things up.

I don't plan on a lawyer to negotiate with her, although I will probably consult one about the residency issue, and may need the lawyer to show up in court for us since likely we will both be out of state.

[Grey Kitty]

Background: Married ~25 years. Separated ~1 year. No kids. My wife had a lot of BPD symptoms, was always high functioning, and did some serious personal work after I made it onto these forums, and hasn't been abusive toward me at all, even during our split. This is really more like a "normal" amicable divorce than a BPD divorce, and certainly not a high conflict divorce.

Residency is complicated by me living on a boat and her traveling, and not having a place she pays rent on or owns for herself. We both claim legal residency in WA, so if specific state law matters on any of this, that is where to look.

We've agreed to split things 50/50, and my wife proposed the valuation to me; I am about to get back to her on it. There are two sticking points, that I would like advice on:

1. Basis for valuation of the boat. It was jointly purchased and worked on together. My wife valued it based on the actual purchase costs plus money sunk into it for improvements. (Not putting a value on either of our labor)

I believe that it should be fair market value, what somebody would agree to buy it for, which is SIGNIFICANTLY lower.

(Other items that I ended up with seem to be valued at low-end replacement cost for her, but it is small enough change that I'm not wanting to make it a fight)

2. IRA/Pension accounts. We both worked, we both have them, but my wife is a few years older than I am, and ended up with more in her IRA, and also has a small pension/annuity that will give her monthly payments in a decade.

She says that hers are hers and mine are mine.

We have both retired (very young for that) and are living off other investments (with a very little bit of paying work on occasion) and were always planning on living together off these investments for another decade or two until we started dipping into the IRAs. Prior to the split, we had no separate finances at all.

I believe that the retirement accounts are common property as well, and need to be considered.



The next step is my counter-proposal on valuation, and then we come up with some kind of agreement and split things up.

I don't plan on a lawyer to negotiate with her, although I will probably consult one about the residency issue, and may need the lawyer to show up in court for us since likely we will both be out of state.

[GaGrl]

I would insist on market value for the boat... .it's really the same as assigning value on a house, as in what would the appraisal be if you wanted to sell.  It's analogous to the valuation of stock... .it is worth what it was worth on the market the day of valuation - not what it was worth when purchased (good or bad).

My husband and I have planned for retirement in the same way you describe... .my 401k is more substantial and I have a pension besides; it was a result of his walking away from his 33 year marriage to the uNPD/BPD, and we look at it as "our" retirement plan. It's a tricky point of divorce negotiation, hard to say if it is worthwhile to pursue. If you are talking about 6 figure retirement funds, yes. If the pension makes a substantial difference in monthly cash flow, yes.

[flourdust]

I believe standard practices for valuation are set on a state-by-state level. What are the laws or presumptions of your state? If you don't know, that would be an excellent set of questions to bring to an attorney for a consultation.

In my state, here's what the presumption is:

Anything that belonged to you before the date of marriage or was given specifically to you during the marriage as a gift (not counting gifts from your spouse) are non-marital property, and they belong to you. The exception is any money that you've commingled during the marriage. So, if you brought a TV to the marriage, the TV is yours. If you brought $5000 in savings, unless you've kept it separate, that's marital property now.

High-ticket items are generally valued at fair market value or an independent appraisal, if no market value can be determined. That would apply for the boat and perhaps things like expensive pieces of jewelry.

Most property is valued by "garage sale" rules -- what would you get for something like it from Craigslist. This is usually pretty far below what you paid for these items. It's generally not worth it to nit-pick values of most household items - just divide them up somewhat equitably.

Retirement fund contributions from after the date of marriage are marital property and split 50/50, regardless of whose account they are. Retirement funds from before the date of marriage are non-marital property. There's a formula used to calculate how to divide these. If my retirement account is X dollars contributed before the wedding, and Y dollars afterwards, then I would get X (+growth) and 1/2 Y (+growth) as my portion of the funds.

This is how it works in my state.

[ForeverDad]

Sounds like you need to get an appraisal on the boat.  That carries a lot of weight.  Court generally deals with the way things are, not the past.  Improvements may be considered but probably only if one paid more than the other.

I recall what happened with my house in the divorce.  I got the house, she wanted to use an old appraisal, market had peaked and was starting to deflate, I had the real estate assessment which was lower.  We settled and so we split the difference.

[formflier]

 

Grey Kitty,

I used a monthly paid legal service that gets me free phone consults and discounts on referrals.  I will PM you specifics.  I have a lot of side business things that bring up legal questions from time to time.  Has been very helpful to me.  $17-18 per month.  In fact, that reminds me, I need to call in about that speeding ticket, they have gotten me out of several of them,  

Boat:  Fair market value.  Just like houses, many times you get upside down on them when you look at your labor and what you have sunk into them.  Note:  If you get down to dickering about a couple grand here and there, this is easy place to hand her a couple grand, or take it, to settle something.  Without exchanging actual cash.


Retirement funds:  Consult the lawyer in WA to confirm, but I'm 99.9% sure you would EXCLUDE funds in retirement accounts from prior to marriage.  INCLUDE them for contributions put in after marriage.  This will take some Excel work, just make sure you give same peformance metrics and run the accounts side by side.  Obviously stuff from prior to marriage will be longer in years.  How much was put in before the marriage?

Note:  Military guys have to give up half of their retirement if they were married the entire time.  Mine is mine just doesn't work in the eyes of the law.

Good luck on this, do you have a timeframe?

FF

[Grey Kitty]

I'm glad to hear confirmation(s) that the law would be on my side. That is what I'm hearing every place I look.

She made some contributions to the IRA at a job that she worked ~4 years before our marriage and ~1 year after. The bulk of the contributions were from other jobs after we got married. Sorting that out will be a mess... .especially since we may not have many records left from back that far... .

I think since the law is pretty clear I will just tell her that this is how I understand the law to be even though I haven't talked to a lawyer, and try again.

As far as putting value on household items/etc... .I don't want to nit-pick too much... .but when we split, she wasn't willing/able to take 90% of the stuff. And now she's trying to assign a value to them, and take a similar chunk of cash when we divide that up. So I've got to address it in some way.

For some reason, it feels important to her to get "paid" for these things.

Honestly, I'd rather give her the money than spend it on a lawyer fighting her over it... .within reason.

My goals are:

1. FINISH the division so that she and I can try to be friends without this hanging over us--I know it is holding me back from being close to her.

2. Divide things up fairly, or close enough.

3. We are civil, even friendly, if a bit distant right now, and neither has a new partner pushing us to screw the other over financially. I want to strike while the iron is hot, so to speak!

For me, finishing the financial division is important, *mostly* because the boat is my home, and it is legally a joint asset, and I'm not comfortable with that.

The last conversation we had about it, she expressed a desire to finish the divorce, as she didn't want to have liability for my actions, etc. (For me, the divorce is less of a timely issue.



I owe her a response to her proposed valuation/etc. today.

[formflier]

 

Don't worry about records that far back.

Demonstrate that you are a "good guy" and assume she made max contribution.  $2k a year.  Set that up as separate account in an excel spreadsheet.

Then set up separate spreadsheet for stuff after you are married.

Use same rate of return and other assumptions for both.

Are you good with excel?

Once you get spreadsheet set up, play around with it a bit.  Change the $2k per year to $1k per year before marriage and see what the outcome is on your bottom line.  That will let you know if searching for records is worth it.

FF

[ForeverDad]

For me, finishing the financial division is important, *mostly* because the boat is my home, and it is legally a joint asset, and I'm not comfortable with that.

Does she have a marital home of her own?  Then it would work out to be what amount would equalize the marital equity across both.

If she doesn't have an owned marital residence then still consider the boat as though it were a house (owned home) and you just split the marital equity (appraised value minus mortgage/loan) of the boat.  If you're living in it and she is living elsewhere no judge is likely to force it to be sold or assigned to her unless you couldn't pay her share of marital equity after it and everything else were combined.

As we often say, either spouse can delay a divorce but not stop it.

[Grey Kitty]

FF, the math is far messier than your example, and if I need to do it, I'm good at excel, and I'll manage that part just fine.

FD, nope, no other home at all for either of us. And we have joint assets that far exceed even her excessive valuation of the boat, so I can afford to pay her off.

In the end, the only question is how much each of us takes out of the joint account(s) when we finish dividing things up.

Neither of us is trying to stop this, but it is unpleasant and difficult, and we both have other things that we would enjoy doing more, and lack serious reasons why it needs to be done NOW, other than general wanting to simplify our lives and not wanting to be living under risk/uncertainty that isn't needed at all.

[ForeverDad]

Getting an appraisal may at least simplify the boat equity issue.  Good investment for a few hundred dollars.

[flourdust]

Just bear in mind that valuation rules really are state-dependent. The examples you've been given might not apply to your state, if it has more specific rules about dividing assets.

[formflier]

Getting an appraisal may at least simplify the boat equity issue.  Good investment for a few hundred dollars.

Totally agree, spend the money.  I'm assuming boat appraisals are kinda like real estate, where you will get examples of other boats to see how they based it.

GK,

Separate question:  Have you asked a lawyer which states rules will "win" if either one of you decide to contest or go to court?  That is something that you will need to know.

FF

[Grey Kitty]

Appraisal later, if needed. The last word from her isn't contesting WHAT the FMV for the boat is--she is saying it should be valued at sunk cost instead.

Spending a couple hundred to come up with a number for FMV won't change her mind on that one, although I hope she will be reasonable and come around.

As for the jurisdiction issue--my plan is to work on coming up with a division of assets that she and I can agree upon, and then figure out how and where to submit paperwork and deal with residency requirements. If we can come to a reasonable agreement before we hit lawyers and courts, and both just want to finish signing things and be done with it, that will be easy. I doubt the court will look hard to disqualify us for residency reasons, assuming both parties want to go forward with it.

The alternative--involving lawyers and/or courts while we are trying to hash out an agreement is going to burn money a lot faster.

If we can hash things out to the point where the disputed number is in 4-digits, hopefully on the low side, I'd rather give it to her than lawyers!

[formflier]

Appraisal later, if needed. The last word from her isn't contesting WHAT the FMV for the boat is--she is saying it should be valued at sunk cost instead.

OK, hmm.  Then tell her the retirement accounts are worth what has been put into them, not what you can get if you sold them.  Same thing. 

If we are talking a few grand in difference, then don't use this tactic to try and get her to be reasonable. 

But, if the boat is worth what has been put into it then that way of approaching it gets used on all assets.  I suppose that would take away appreciation/depreciation from all assets.

I don't agree with that method but if someone wanted to apply that way of thinking to all the marital assets, then I don't think I would have a problem with it.  If they "only" want to do that with the boat, but switch thinking (methods) when you go on to other assets, then I don't think there is any integrity to that approach.

If we can hash things out to the point where the disputed number is in 4-digits, hopefully on the low side, I'd rather give it to her than lawyers!

Very wise approach. 

OK, GK you have been very kind to me to point out areas for me to focus on.  I think you need to ask a lawyer some questions about "what if", just so you know.

You don't know, what you don't know.

This is a FF shove to ask questions about what state "rules", or to at least "define the ambiguity" of the situation.

FF

[livednlearned]

GK,

If your goal is to avoid hashing this out in court, the specific laws are only as meaningful as you make them. Meaning, use them to help you decide what is fair and how to leverage things in negotiations or mediation.

On a separate note, I would not totally underestimate the potential for conflict. Weird things happen when people get served or receive letters in legal language. It's an adversarial system even in the best of situations. Legal language can be triggering whether you are BPD or not. You know your wife well, and this may be beside the point, but I caution you to prepare for a period where her emotions are on tilt. They may go back to status quo in due time, though don't be surprised if she barrels through some unpleasant emotions and lets that drive her negotiations.

I would also not underestimate the emotional reasoning she brings to the negotiating table. People with BPD, or BPD traits, are (as you know) emotionally hypersensitive. This can be to her an advantage if she accurately perceives your emotional strong and weak spots. She knows you want and love that boat. She is likely valuing it on the high end because she recognizes that the real value of the boat is how you feel about it.

So yes. By all means get it appraised. Or, if you want to save some cash, assume that she knows exactly where she has leverage (your love for the boat), and adjust your negotiations accordingly so that she feels that she's winning somewhere else.

And if you at all suspect (based on past experience with her) that she will cost you money for being the nice guy, factor that in. I gave my ex the house and it ended up costing me money to do so. Lesson learned. He was classic high-conflict, so you won't likely experience the degree of conflict that I did, but I do think there is a cost for being the emotionally stable or mature one in the relationship. If fees have to be paid or lawyers have to be hired or papers have to be filed, etc. it will likely be you who has to handle those items. If she is traveling and you can't get documents signed, or whatever the scenario is, factor in any expenses you expect will fall to you. In other words, make sure anything you "gift" away has its expenses covered in some other part of the negotiation, including the potential need to go to court.

[ForeverDad]

Hold onto enough items or $$$ as 'leverage' for you get get compliance with any agreement or order.  For example, once she gets everything agreed for her, then she has no Incentive remaining to continue compliance and you have no Leverage to impel her to comply.  Be aware.

[Grey Kitty]

So far we are both trusting each other here--while we have some differences in how we value things and what should or shouldn't be included, we've stayed clean.

The assets we are living on are still sitting in joint accounts, (except for our respective IRAs) that either of us could empty in under an hour.

She has no history of being litigious or of having emotional issues tied toward money.

LnL, I think rather than trying to be greedy and use my love for the boat as leverage to get more from me, she is getting caught up in her own love for the boat and her sense of loss for the boat, and feels a bit entitled to something for that.

I'm trying to find a good balance in how I approach this--I pretty much let her be the dominant one throughout all but the end of our marriage, and I'm working to change that. I've also figured out (in my own head) that this is a financial/business transaction ending our marriage, and neither side is really entitled to $$$$$ for emotional costs. I want to leave this without either of us feeling cheated by the other--I hope to be able to get closer to her as friends when we don't have this hanging over us anymore.

And lastly, I don't want to get in a legal pissing match--I'll spend a lot of money on a lawyer, and (within reason!) I'd rather give her the money than give it to a lawyer and create conflict. But I don't want her to know this and think she can take advantage of it.

I'm quite sure she wants to maintain goodwill and friendship with me. I don't know if having this unfinished is holding her back like it is me--I'm not close enough to her to be involved, and we both have better boundaries than sharing that kind of thing. At least much. She might have a hint about this... .we do both know each other very well, of course.

My goal plan is to seek an agreement about everything together (rather than one piece at a time), and get her name off the boat at the same time we transfer assets. If we do it all as one transaction, (kinda like a house closing), it is fair and doesn't expose either of us. And I don't think either of us wants to have the other one by the short hairs.