Valuing assets in a divorce

Splitting assets in a divorce sounds simple until you try to do it. A $500,000 house and a $500,000 brokerage account are not equivalent, even though the numbers match. The house comes with transaction costs, maintenance, and illiquidity. The brokerage account can be sold tomorrow with a phone call. Every asset class has its own valuation wrinkles, and getting this wrong means one spouse walks away with substantially less than they think.

The family home

The house is usually the largest single asset and the most emotionally charged. Valuation requires a formal appraisal — not a Zillow estimate, which can be off by 10–20% in any direction. An independent appraiser typically charges $400–600. If you and your ex can't agree on one appraiser, each side hires their own and you split the difference or let the court decide. Remember to subtract the remaining mortgage balance, any home equity line of credit, estimated selling costs (5–6% in agent commissions plus 1–2% in closing costs), and any needed repairs. A home 'worth' $600,000 with a $350,000 mortgage and $42,000 in selling costs has actual equity of about $208,000.

Retirement accounts

A 401(k) balance of $400,000 is not worth $400,000 in today's dollars. Every dollar will be taxed as ordinary income when withdrawn — likely at 22–32% depending on the bracket. The after-tax value is closer to $280,000–312,000. A Roth IRA, by contrast, is worth its full face value because withdrawals are tax-free. When comparing retirement assets to non-retirement assets, always discount the pre-tax accounts for their eventual tax hit.

Stock options and RSUs

• Vested stock options have a clear market value: current share price minus strike price, times number of shares. But unvested options are trickier — they represent future value that depends on continued employment and share price.
• Courts in most states use a 'time rule' formula: the fraction of the vesting period that overlapped with the marriage determines the marital portion.
• RSUs (restricted stock units) are simpler — each unit equals one share at vesting — but the same marital-period allocation applies.
• Don't forget the tax hit. Options and RSUs are taxed as ordinary income at vesting or exercise. A grant 'worth' $100,000 might net $65,000 after federal and state taxes.

Businesses

Valuing a privately held business is expensive and subjective. A certified business appraiser will charge $5,000–30,000 depending on complexity. They'll look at revenue, profit margins, comparable sales of similar businesses, and future earnings potential. The range of reasonable valuations for the same business can easily span 30–50%. If your spouse owns a business, hiring your own valuation expert is not optional — it's the single most important financial decision in the divorce.