Section 20-107.3 of the Code of Virginia of 1950, as amended, establishes Virginia as an equitable distribution jurisdiction, meaning that its Circuit Courts are empowered by statute to determine an equitable, but not necessarily equal, distribution of property and debts in connection with divorce proceedings in which such relief has been requested. The default rule provides that property and debts will be valued as of the date of the equitable distribution hearing. See id at §20-107.3(A). The statute explains, however, that “[u]pon motion of either party made no less than 21 days before the evidentiary hearing the court may, for good cause shown, in order to attain the ends of justice, order that a different valuation date be used.” Id. Please continue reading for some thoughts from the attorneys at Keithley Law, PLLC, PLLC about what constitutes “good cause,” in this context, and how to properly raise alternative valuation date issues for the Court’s consideration.
Statutory Considerations in Motions for Alternative Valuation Dates
Virginia Circuit Courts consider eleven factors when determining “[t]he amount of any division or transfer of jointly owned marital property, and the amount of any monetary award, the apportionment of marital debts, and the method of payment….” §20-107.3(E). These factors include “[t]he contributions, monetary and nonmonetary, of each party in the acquisition and care and maintenance of such marital property of the parties” and “the use or expenditure of marital property by either of the parties for a nonmarital separate purpose or the dissipation of such funds, when such was done in anticipation of divorce or separation or after the last separation of the parties….” Id. As previously discussed, a motion for an alternative valuation date must be made at least 21 days before the equitable distribution hearing. See id at §20-107.3(A). An effective argument that there is good cause for an alternative valuation date will emphasize the considerations relevant to equitable distribution awards and explain why using date-of-hearing valuations would lead to an inequitable result.
“Good Cause” for an Alternative Valuation Date
Certain assets, including businesses and real estate, can fluctuate wildly in value between the date of separation and the equitable distribution hearing, especially if a lot of time passed before the initiation of divorce proceedings. A marital home, therefore, might need to be valued before a post-separation addition from separate funds, and a business started during a marriage that did not become successful until significant post-separation efforts, might be more equitably valued as of the date of separation. Relatedly, a party who has lived in a marital home during a long separation might have allowed the home to fall into disrepair, and an alternative valuation date could serve to hold them responsible for the reduction in marital equity available for distribution by valuing the home before this neglectful lack of maintenance.
Marital waste and dissipation deprive a divorcing spouse of assets that should have been subject to equitable distribution. Consistent with the aforementioned statute, the Court of Appeals of Virginia has stated that “[d]issipation occurs ‘where one spouse uses marital property for his own benefit and for a purpose unrelated to the marriage at a time when the marriage is undergoing an irreconcilable breakdown.’” Clements v. Clements, 397 S.E.2d 257, 261 (Va. Ct. App. 1990). The Clements court elaborates on the burdens associated with a motion for an alternative valuation date by stating that “the burden is on the party who last had the funds to establish by a preponderance of the evidence that the funds were used for living expenses or some other proper purpose. If the party is unable to offer sufficient proof, the court must value the property at a date other than the date of the evidentiary hearing so as to achieve an equitable result.” Id. Further to this point, using marital funds to finance divorce litigation can be a “proper purpose,” under the right circumstances. See Amburn v. Amburn, 414 S.E.2d 847, 850 (Va. Ct. App. 1992). Under this analysis, allegations that a party used marital assets to finance an adulterous affair or made significant gifts to friends or family members without the consent of their spouse could constitute good cause for an alternative valuation date.
While an alternative valuation date will not be necessary in every equitable distribution proceeding, the failure to timely seek one, in appropriate cases, can significantly prejudice one’s interests. Contact the attorneys at Keithley Law, PLLC, PLLC at 703.454.5147 to schedule an initial consultation to discuss the specifics of your circumstances.
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