Property negotiations may be fruitless if you cannot agree on the value of the assets.

Dividing by percentages is only useful when the value of the 100 per cent share  the whole pie – has been quantified. Without this, the value of a partial share cannot be understood. It is important to determine values for assets and liabilities before you begin to negotiate the allocation of items or percentages.

You may stumble at this very first hurdle. Many people do. If you can't accept each other's assertions of the value of cars and boats and so on, work towards agreeing on how to determine the value.

Selling the asset in an agreed timeframe is one way of determining market value. Some people agree that they will split the proceeds from auctioning a property, whatever they turn out to be, in certain percentages. This is a viable method of breaking a deadlock about asset value, though a little risky – the market sometimes gives results that surprise everyone.

If there is a certain dollar value vital to settling and the value of significant assets cannot be determined, it may be unwise to commit to a percentage-only settlement.

What the court will do if parties can’t agree on values

You should be able to provide reasonably certain evidence of the values of all of the assets by the time of trial.

If the values are not disputed, not having firm evidence may not be a huge deal. If they are disputed and the parties' assessments differ significantly, the court will apply “appropriate principles and methodology” and arrive at its own assessment of value. Its methodology may involve an order to sell the property.

Timing of the valuation

Unless there is a great distance between the separation date and the trial date, or other special considerations, the relevant date for evaluation is the date of the trial.

This is worth thinking about when considering the dollar effect of the delays involved in long-term litigation, particularly in relation to capital gains or losses on real estate and other investments.

Assessing value

There are no fixed rules for valuing assets in the pool. The method chosen should reflect the nature of the asset and the circumstances of the case.

Fair market value

The measure usually employed by the courts is “fair market value”. This is the price that a willing (but not desperate) buyer, with adequate information about the asset, would pay to a willing (but not desperate) seller.

Depending on the nature of the asset, fair market value might be the price achievable at auction, the price obtainable from a second-hand dealer or the value given by a licensed valuer.

Fair market value does not usually equate with “the price I paid for it”, “what I think it's worth”, the insured value, or the replacement value.

If there are time pressures…

If it is likely that an asset will need to be sold to give effect to the settlement, the price for which the asset can be sold quickly is the relevant value. This may be lower than what might be achieved if the parties had time to strive for the best possible price.

Obtaining a valuation

There are licensed valuers for almost all assets, with many specialising in valuations for family law purposes. Check with a financial adviser, real estate agent, or the Yellow Pages to find local professional valuers.

Although it may prove to be accurate, a real estate agent's assessment of real estate value is not a professional valuation and cannot be relied on as such. In any case, a party may have difficulty accepting the impartiality of an assessment made by an agent hired by the other party.

A licensed valuer's assessment of real estate should cost between $600 and $1500. Many couples agree to split this cost or deduct it from settlement shares, like other costs of sale. It usually proves to be money well spent.

Valuing superannuation

There is a separate scheme for valuing superannuation under the Family Law Act.

Valuing a company

Although family companies are often valued on the basis of dividends, they may also be assessed on the basis of revenue, capital, or garage-sale value, depending on which method appears likely to yield the most realistic result.

Valuing a business, trust or corporate structure should be done by an actuary, accountant, solicitor or other professional adviser.