Active and Passive Appreciation of Separate Property in Divorce

Feb 16

Hi Welcome to ValuationPodcast.com - A podcast and video series about all things related to business and valuation. My name is Melissa Gragg, and I provide divorce valuation and mediation services in St. Louis Missouri.

Today we will discuss Active and Passive Appreciation of Separate Property in Divorce with Dr. Ashok Abbott, an associate professor of finance at West Virginia University and founder of Business Valuation, Inc. where he provides value by determining statistical significance, validating economic models, establishing causality, and providing rigorous empirical analytical support.

Welcome Dr. Abbott!!

We are going to discuss an interesting topic in valuation and divorce, so let’s start with some simple terms so everyone can understand the significance of your research paper and analysis.

Let’s start a general discussion about divorce and how we divide and distribute the marital estate – what are the four questions we should consider?
Is it in fact property?
Is the property marital or nonmarital?
How much is the property worth?
How much of the property does each spouse get?
In a divorce, how do you determine if property is marital or separate?
Can you explain to us how marital property is distributed in a community property state? (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington & Wisconsin)
What does it mean to have an “equitable distribution” of marital property?
What is active appreciation in an asset or business?
What is passive appreciation in an asset or business?
Why do we care whether a business has active or passive appreciation during a divorce?
You wrote a research paper titled Passive Appreciation in Divorce: A Quantitative Measure. Tell us more about this research and why this is an important topic for valuation experts.
How do you determine what affect the passive factors have on a business valuation?
Do you have any past cases where separating the martial assets difficult?
How can a business valuation expert utilize your research? Can this method of quantifying the passive appreciation be used in court?
Tell us more about you and your company!