Standards of Value
The basic Standards of Value
are Fair Market Value, Fair Value,
Investment Value, Intrinsic Value
and Book Value. These are not
to be confused with Premises
of Value (Going Concern, Liquidation or many others) or Valuation Approaches (Income, Market or Asset) or finally, Valuation
Methods (Discounting, Capitalization, Guideline, Excess Earnings) or many others.
‘Fair Value’ in a Divorce
The State of Arizona currently
has no hard-and-fast law or
statutes indicating any specific
standard to be used in a divorce
valuation. It falls upon the shoulders of the Court to make that
determination based on the facts
and circumstances of each case.
Many Family Law courts sometimes utilize the Fair Value,
without actually calling it the
Fair Value. Herein lies a major
When preparing an appraisal report, the appraiser should
identify the applicable Standard of Value used in arriving at
their conclusion.
In a divorce-related valuation in Arizona, that’s as straight
forward as trying to figure out which Cardinal team will show
up on Sunday.
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DAVID CANTOR, CPA/ABV
Mr. Cantor has extensive experience in family law accounting and knowledge
of relevant case law in Arizona and California. He has provided forensic
accounting services on several hundred family law matters and testified in
family law courts over 100 times. Please call or email him with your questions.
480.620.8486, dcantor@eppsforensics.com
Determining Standard of Value
in a Divorce-Related Valuation
misconception; when the terminology ‘Fair Value’ is used in a
Divorce setting, it usually is not
the same as Fair Value used in a
dissenting stockholder or shareholder oppression action. Often,
despite the terminology used by
The Court, the actual Standard
used is not the one identified by
the Court.
Determining The True
Intent Of The Court
An example of this appears
in the Bibars case ( 1 CA-CV 11-
0473, Court of Appeals of Ari-
zona, Division One, Dept. B, 2012
Ariz. App. UNPUBLISHED Lexis
897). The Court states “We note,
however, even wife’s valuation
document acknowledges that
‘Fair value’ (also known as in-
vestment value) refers to a stan-
dard of value of a business to
a particular investor without
regard to a sale or exchange ...”
One can infer from this that the
Court believes Fair Value and
Investment Value are synony-
mous. This just is not true. It is
important that the entire opin-
ion be read to determine the
true intent of the Court as op-
posed to the specific name as-
cribed to their findings.
Case-by-Case Definition
The bottom line is that there
is no definitive Standard of Value for divorces defined in Arizona. As of now, this arena is completely fact-driven, given the
dynamics of each individual
case.
As a final note, attorneys need
to be conscious of the fact that
terminology used in prior cases
by the Court and the conclusion
reached by the Court in those
same cases may not go hand-in-hand. Sometimes the discussion
of the case by the Court contradicts the Standard of Value that
they referenced.
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