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Understanding the importance of the valuation date

Married couples in Nashville that elect to seek a divorce will often begin to look forward to certain dates. These may include the date that their divorce proceedings officially begin, the date their divorce is finalized, or the date that the stipulations of their divorce settlement officially begin. One important date that is often overlooked, however, is the valuation date of their marital assets. 

Why would this date be important? Tennessee's laws mandate that marital property be divided up fairly and equitably between spouses. In some instances, the "bad blood" that continues to exist between a divorcing couple might prompt one to intentionally devalue a marital asset in order to impact their spouse's interest in it. In states where the valuation date in a divorce is the date a couple separates, there is no incentive to do this. Yet Section 36-4-121 of Tennessee's Domestic Relations Code shows that the states sets the valuation date in a divorce case as close to the date on which the order detailing marital property is submitted as possible. 

One type of asset that is particularly affected by the valuation date is a business. A person who owns their own company might try to offload business assets or scale back operations during their divorce proceedings in order to keep their spouse from benefitting from their professional efforts. The non-tangible assets that arise from those efforts (including a company's reputation) are considered it's "goodwill." Tennessee state courts have ruled that while goodwill can be viewed as an asset, it is not one that establishes a separate property interest. Thus, it cannot be considered when dividing up business asset interest in a divorce. This essentially takes away the motive to devalue a business during divorce proceedings. 

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