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Valuation of Noneconomic Contributions

Valuation of Noneconomic Contributions

The economic partnership concept that underlies equitable distribution recognizes the noneconomic contributions of a spouse to the acquisition of marital property. Equitable distribution recognizes that the homemaker’s noneconomic contributions can play a substantial role in the acquisition of property during marriage and entitle the homemaker to share in the fruits of the marital partnership when it ends.

Proving the Economic Value of Noneconomic Services

It is the responsibility of the attorney representing the party who has contributed noneconomic services to establish what those contributions were and to prove their economic value. There are two possible ways of calculating the market value of a homemaker’s services: The replacement cost approach and the opportunity cost approach.

Replacement Cost Approach

To establish the value of the homemaker’s services using the replacement cost approach, the attorney or his or her expert makes assumptions about the wage rate for the tasks performed. The general replacement analysis simply hypothesizes hiring a housekeeper to perform all the cooking, cleaning, escort, and other services of the spouse.

A more common approach is to value homemaker services by breaking them into component tasks, determining the applicable wage rate in the marketplace, estimating the hours per week devoted to each task, and multiplying the appropriate number of hours by the appropriate rate.

Opportunity Cost Approach

To establish the value of the homemaker’s services using the opportunity cost approach, the focus is on the occupation the homemaker has foregone. If there is an identifiable occupation in the market place that the homemaker could reasonably have pursued, it is assumed that the opportunity was sacrificed to become a homemaker. Under this approach, the homemaking services are equivalent in value to opportunity that was ”lost” due to the marriage.

Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.

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