Section V: Valuation of Assets and Division of Property - Adam Astley 402-344-4000
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Section V: Valuation of Assets
and Division of Property
Adam Astley
402-344-4000
aastley@liebenlaw.com
Friday, December 7, 12 1
www.adamastley.com Friday, December 7, 12 2
Premarital Agreements
• § 42-1001 et. seq.
• Requires Full Financial Disclosure or
Waiver of Disclosure
• Must be signed prior to marriage
• Can waive marital property, elective share,
and spousal support
Friday, December 7, 12 3Valuation of Assets
• Income Approach
• Market Approach
• Replacement Cost and/or Liquidation
Approach
Friday, December 7, 12 4Income Approach
• Income-producing assets have value
• Attempt to compare the income stream to
businesses with similar levels of risk
• Multipliers are just a “shortcut”
Friday, December 7, 12 5Basic Income Valuation
• Normalize Income Stream
• Capitalize Income with Cap Rate
• Apply Discounts (if appropriate)
Friday, December 7, 12 6Normalized Income Friday, December 7, 12 7
Friday, December 7, 12 8
Market Approach
• More commonly used for real estate
• Relies on the “Principal of Substitution”
• Must have comparables that are close to
the subject property
Friday, December 7, 12 9RESIDENTIAL APPRAISAL SUMMARY REPORT File No.:
My research did did not reveal any prior sales or transfers of the subject property for the three years prior to the effective date of this appraisal.
Data Source(s): MLS/County records.
TRANSFER HISTORY
1st Prior Subject Sale/Transfer Analysis of sale/transfer history and/or any current agreement of sale/listing: The last deed transfer on the subject was
06/27/2004 June of 2004, sales price was $108,000. No other prior transfers of the subject property in the past 36
Comparable Sales
Date:
Price: $108,000 months. County records.
Source(s): County Records
2nd Prior Subject Sale/Transfer
Date: N/A
Price:
Source(s):
SALES COMPARISON APPROACH TO VALUE (if developed) The Sales Comparison Approach was not developed for this appraisal.
FEATURE SUBJECT COMPARABLE SALE # 1 COMPARABLE SALE # 2 COMPARABLE SALE # 3
Address Street Street
Omaha, NE Omaha, NE Omaha, NE Omaha, NE
Proximity to Subject Same Street 0.24 miles 0.23 miles
Sale Price $ 0 $ 126,000 $ 120,000 $ 119,900
Sale Price/GLA $ /sq.ft. $ 110.14 /sq.ft. $ 115.38 /sq.ft. $ 124.90 /sq.ft.
Data Source(s) DOM=68 Days DOM=3 Days DOM=169 Days
Verification Source(s) Walk-Through County/MLS/Drive-by County/MLS/Drive-by County/MLS/Drive-by
VALUE ADJUSTMENTS DESCRIPTION DESCRIPTION +(-) $ Adjust. DESCRIPTION +(-) $ Adjust. DESCRIPTION +(-) $ Adjust.
Sales or Financing Conventional Conventional Conventional
Concessions SPC=$0 SPC=$0 SPC=$0
Date of Sale/Time 01/31/2008 06/19/2008 07/18/2008
Rights Appraised Fee Simple Fee Simple Fee Simple Fee Simple
Location
Site 7,700 Sq. Ft. 9,800 SF/Sim. 9,936 SF/Sim. 7,616 SF/Sim.
View Res/Typical Res/Typical Res/Typical Res/Typical
Design (Style) Split-Entry Ranch Ranch Ranch
Quality of Construction Average Average Average Average
Age 50 Yrs. 51 Yrs. 49 Yrs. 48 Yrs.
Condition Average Average Average Average
Above Grade Total Bdrms Baths Total Bdrms Baths Total Bdrms Baths Total Bdrms Baths
Room Count 4 2 1 6 3 1 5 3 1 5 3 1
Gross Living Area 912 sq.ft. 1,144 sq.ft. -4,600 1,040 sq.ft. -2,600 960 sq.ft.
Basement & Finished 100% 100% 100% 100%
Rooms Below Grade 722 Fin/Full Bath 700 Fin/.75 Bath +250 550 Fin/No Bath +2,000 645 Fin/.75 Bath +250
Functional Utility 2 Bedroom Flr Plan 3 Bedroom Flr Plan -2,000 3 Bedroom Flr Plan -2,000 3 Bedroom Flr Plan -2,000
Heating/Cooling FWA/CA FWA/CA FWA/CA FWA/CA
Energy Efficient Items Typical Similar Similar Similar
SALES COMPARISON APPROACH
Garage/Carport One Car Att. One Car Att. One Car Att. One Car Att.
Porch/Patio/Deck Porches Porches Porches Porches
Fireplace, Etc. 1 Fireplace None +1,500 None +1,500 None +1,500
Fence, Pool, Etc. Partial Partial Partial Partial
Additional Upgrades None None Sprinkler -1,000 None
Net Adjustment (Total) + - $ 4,850 + - $ 2,100 + - $ 250
Adjusted Sale Price Net 3.8 % Net 1.8 % Net 0.2 %
of Comparables Gross 6.6 % $ 121,150 Gross 7.6 % $ 117,900 Gross 3.1 % $ 119,650
Summary of Sales Comparison Approach The comparables selected are from the same market area as the subject and are considered to be
Friday, December 7, 12 reliable indicators of the present estimate of market value. All are similar in age, quality, and most amenities. The subject is smaller in square 10
footage than the comparables, therefore bracketing of above grade gross living area was not achieved. The subject along with comparable 4
have a two bedroom above grade floor plan and they are inferior to comparables 1, 2, & 3. Line adjustments made to the comparables
regarding GLA, basement finish, bedroom utility, and some amenities reflect the value given to the subject. The comparables used bracket the
subject in estimated value, are the most recent similar sales available, and adequately support this opinion of market value of the subjectRetirement Accounts
• Defined-Contribution: 401K, IRA, 403B,
457, SIMPLE, SEP, or TSP
• Defined-Benefit: FERS, CSRS, CSRS Offset,
Military Retired Pay, NPERS, Local Gov’t
Pensions, and Private Pensions
Friday, December 7, 12 11IRA’s
• Traditional IRA: Tax Deductible
Contributions; Withdrawals are taxed; Early
withdrawals are taxed and penalized
• Roth IRA: After-tax Contributions;
Withdrawals are tax-free; Early withdrawals
of basis are tax-free; Early withdrawals of
growth are taxed and penalized
Friday, December 7, 12 12IRA Rollovers
• Typically require a notarized IRA Rollover
Letter
• Some require a Signature Guarantee or
Medallion Signature
• Typically can adjust for gain and loss
Friday, December 7, 12 13What makes a QDRO?
• Cannot require the plan to provide
increased benefits
• Cannot re-assign benefits previously
assigned under another QDRO
• Cannot require a benefit not otherwise
available under the plan
Friday, December 7, 12 14Taxation of QDRO
Distributions
• Rollover distributions preserve their tax-
deferred status
• Cash distributions are taxed as ordinary
income (no penalty)
• DOL Regulations now allow multiple
QDRO’s for the same account in different
tax years
Friday, December 7, 12 15Defined-Benefit Plans
• Shared Payment: Payments are shared on a
percentage-basis; causes fights over
survivor annuities
• Separate Interest: Alternate Payee’s interest
is re-computed based on his/her life
expectancy
• Cash Balance: Segregates a portion for the
Alternate Payee based on a cash balance
Friday, December 7, 12 16Surivorship
• Pensions pay for the lifetime of the
Participant (not necessarily your client)
• Survivor Annuities are like life insurance for
the spouse (or former spouse)
• Survivor Annuities are not necessary with
Separate Interest QDRO’s
Friday, December 7, 12 17Survivorship
• If a survivor annuity is desired, it must be
provided for in the Decree
• A QDRO is merely an enforcement
mechanism; it cannot provide any rights not
otherwise provided in the Decree.
• SBP coverage is elected using Form
DD-2656-1 within one year after the
divorce or it is waived forever
Friday, December 7, 12 18QDRO Resources
• www.freeerisa.com
• www.opm.gov
• www.tsp.gov
• www.rrb.gov
• www.dfas.mil
Friday, December 7, 12 19Dividing Debt
• “Pay and Indemnify”
• Require refinancing within a specified time
• Prohibit new charges on each other’s
accounts or on joint accounts
• Require joint accounts to be closed within
a specified time
• Include a sanction for non-payment or
failure to refinance
Friday, December 7, 12 20Sample Balance Sheet
Husband Item Wife
$100,000 House FMV
-$82,000 Mortgage
$18,000 Acura
Suburban $22,000
$5,000 Personal Prop $8,000
$4,000 Bank Accounts $2,000
$45,000 Subtotals $32,000
-$6,500 Equalization $6,500
$38,500 Totals $38,500
Friday, December 7, 12 21Strategies for Asset
Division
• Balance Retirement Accounts Separately
• Or, Tax-Effect Retirement Accounts
• “Cherry Pick”
• “I cut you choose”
• “Auction”
• “Buy Out”
Friday, December 7, 12 22Bankruptcy / Domestic
Support Obligations
• 11 U.S.C. § 101 (14A)
• Owed to a spouse, child, or former spouse
• In the nature of support
• Established by court order
• Not assigned (except to the state)
• Designation by the parties is not binding
Friday, December 7, 12 23Domestic Support
Obligations
• Entitled to priority treatment in all
bankruptcy cases
• Nondischargeable in all bankruptcy cases
• Must be paid in full in a Chapter 13 to
obtain plan approval
• Post-petition amounts must be paid to
receive a discharge
Friday, December 7, 12 24Bonus: Rule 6-332
(3) The deposition of a witness, whether or not a
party, may be used by any party for any purpose
if the court finds: [...]
(B) That the witness is at a greater distance than
one hundred miles from the place of trial or
hearing, or out of the state, or beyond the
subpoena power of the court, unless it appears
that the absence of the witness was procured by the
party offering the deposition; or
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