Asset valuation date fluid in split

Asset valuation split

SMSF members have some leeway in deciding when to value an asset that will be split as part of a divorce.

Married couples within an SMSF going through a separation are not required to place a valuation on any asset they wish to split on the date of the splitting order, but can mutually agree to nominate a date on which to assess their value, according to an SMSF technical expert.

SuperConcepts technical and private wealth executive manager Graeme Colley said the date of valuing assets as part of a split could be agreed upon by the parties rather than being set by the splitting order and this was useful if an asset valuation was hard to obtain.

Speaking during a recent online presentation, Colley gave the example of a couple who split while holding cash, a family unit trust and two properties within their SMSF.

“Under the splitting order the wife agreed that she would request the trustee to create a new interest and the value of that new interest was calculated at a time agreed between the husband and the wife,” he said.

“It was not the value on the day which might be the date of separation, but it might be the day of the splitting order or another date as the parties agree on.

“In this particular case, they had different valuation dates for different assets. For the bank account they had the most recent value of the bank account, the value of the interest in the family unit trusts was from some time ago and they took those as the accepted values for splitting purposes.

“The value of the properties were from some years ago and they used the values of those dates and agreed that would be the way in which things would get split.”

He said as a result of this arrangement around 60 per cent of the bank account went to one party and 40 per cent to the other, while the family trust was evenly split and each party took one property.

“There’s nothing wrong in using these different values providing the parties have agreed on what the assets would be and how they would determine the value of the particular assets,” he said.

He added that in some cases this approach would not work and particular values determined on a particular day will be required.

“These usually require a lot of work to get the values on that particular day and the orders will refer to the payment of tax and some provision for accounting and tax agent fees and so forth,” he said.

“They can be difficult because the fund hasn’t lodged its return on that particular day so the valuation will still only be a notional amount rather than the actual payment.”

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