The valuation of real estate and other assets is an issue that arises in divorce–and it’s often a contentious one. In a divorce, the Probate and Family Court judge needs a complete picture of the parties’ assets and the assets’ value to determine an equitable division of the marital estate. This holds true even for assets located abroad.

The valuation of foreign assets is the central issue in the Massachusetts Appeals Court case, Ayca Celikkol Gazelle v. Guy Scott Gazelle. This case highlights the potential for complexity in asset valuation and distribution. It also illustrates the risk you take when choosing to go to trial.


Brief Case Summary

The Gazelle v. Gazelle marital estate included 11 rental condominium units in Turkey. Before their divorce trial began, Ayca (wife) and Guy (husband) each hired their own expert to appraise these properties. The experts completed their respective appraisal reports in 2016.

In October 2017, the trial began. At trial, Ayca and Guy’s experts presented their individual appraisal reports regarding the market value of the properties in Turkish lira (Turkey’s currency). The trial judge determined the properties’ value (again, in Turkish lira) based on the reports. The judge then converted the value of the assets from the Turkish lira to the U.S. dollar. To do so, he used the currency exchange rate in effect on, or closest in time to, the valuation dates in the parties’ respective 2016 appraisal reports. The divorce judgment, however, did not enter until December 2020–over three years after the start of the divorce trial and four years after the appraisal reports’ completion.

At issue in Gazelle is the currency exchange rate the judge used when valuing the Turkish condominiums (and the rental income they produced). The trial court judge assigned the condominiums to Ayca in the divorce. He did so intending to divide the marital estate equally between the parties. But during the three-plus years between the start of the divorce trial and the entry of the divorce judgment, the value of the lira plummeted. So, Ayca argued, because the judge used an outdated currency exchange rate from 2016/2017 (as opposed to the rate in 2020), he ultimately awarded her significantly less than half the marital estate. For related reasons, Ayca further argued the amount of alimony the court ordered Guy to pay was set too low.

The Appeals Court backs the Probate and Family Court up on this one. Here’s why.


Probate and Family Court Proceedings: Asset Valuation

On October 3, 2017, Ayca and Guy’s divorce trial began. The trial continued for 18 non-consecutive days. It finally ended on December 18, 2018.

Over three years after the start of the trial, on December 29, 2020, the trial court judge entered Ayca and Guy’s judgment of divorce nisi. The judge’s decision on two issues is relevant to the appeal that followed: 1) the equitable division of the marital estate; and, 2) alimony.


Valuation of the Etiler Assets: Judge Determines Market Value in Turkish Lira

Regarding equitable division in this case, the marital estate included 11 condominium units located in the Etiler neighborhood of Istanbul, Turkey (the “Etiler assets”). The wife inherited or bought the Etiler assets from her family.

During the divorce proceedings, Ayca and Guy disagreed regarding the value of the Etiler assets. So, each hired an expert to determine their market value in the Turkish lira. In 2016, the “dueling experts” completed their respective appraisal reports. They later presented those reports to the Probate and Family Court judge.

The judge found that both experts skewed their appraisals in favor of their clients. So, instead of choosing between them, the judge split the difference between the appraisals for the assets in both reports. There were two assets Ayca did not have appraised. For those, the judge accepted the value Guy assigned to them.


Judge Then Chooses Exchange Rate to Convert Assets’ Value into U.S. Dollar

After determining the value of the Etiler assets in Turkish lira, the judge then had to convert their value into U.S. dollars. To accomplish that task, the judge used the currency exchange rate in effect on, or closest in time to, the valuation dates in the parties’ respective 2016 appraisal reports. This process was reflected in the judge’s findings and rulings that the court issued along with the judgment of divorce nisi in December 2020.


Wife Files Motion to Amend Judgment of Divorce Nisi

Ayca took issue with the exchange rate the judge chose and here’s why. During the three-plus years between the start of the trial and the entry of the divorce judgment, the value of the Turkish lira plummeted against the U.S. dollar. Meaning the Etiler assets would be worth less in U.S. dollars if their value in Turkish lira stayed the same.

So, Ayca filed a motion to amend the judgment of divorce nisi in the probate court. In that motion, Ayca requested that the judge recalculate the Etiler assets’ worth in U.S. dollars using an updated exchange rate. She wanted the probate judge to use the exchange rate from the judgment date in 2020, as opposed to the rate from 2016/2017.

The Probate and Family Court judge denied Ayca’s motion. Ayca appealed.


Appeals Court Backs Up the Probate and Family Court

On appeal, Ayca again argued that the Probate and Family Court judge should’ve used the 2020 currency exchange rates, not the 2016/2017 rates, when converting the value of the Etiler assets (and their rental income) from the Turkish lira into the U.S. dollar. Ayca further argued that–because of the significant drop in the lira’s value between the start of trial and the judgment entry–the probate court judge ultimately awarded her much less than one-half the marital estate, which is what he intended to do. For related reasons, Ayca argued that her alimony was set too low and that it should adjust for changes in the exchange rate moving forward.


Valuation in Divorce: “In Many Respects, the Issues Raised by This Case Are Quite Ordinary”

In its analysis, the Appeals Court notes that, in many ways, this case raises “quite ordinary” issues. It is common in divorce for the marital estate to include real estate or other assets whose value can fluctuate over time. So, the contentious question becomes: Should the judge value the assets at the time of trial or at an earlier date (like when the parties separated)? Ultimately, the trial judge has the authority to decide the appropriate valuation date, although it’s generally the date of trial.


“Several aspects of the case before us make this different from the routine scenario.”

A few issues set this case apart from the ordinary, however. First, there was no one trial date in this case. Instead, the trial took place over a prolonged time period: 14 months. And during that time, the nominal value of the Etiler assets could have changed dramatically.

Second, the value of the Etiler assets in U.S. dollars was linked to the changing currency exchange rates.

Third, the parties here don’t have to offer as evidence the exchange rates at any given time. That information is generalized knowledge that is readily available from authoritative sources. So, a judge could take “judicial notice” of the exchange rates and, in turn, assign a value to the assets right up until the judgment date. (The judgment date being when the marital estate division occurs).

According to the Appeals Court, Ayca is essentially asking: “[I]n determining how much the marital estate being divided was worth, why should the judge not make use of readily available, up-to-the-minute [currency exchange rate] data, especially where, as here, a lengthy amount of time had passed?” Not so simple, the Appeals Court says.


“One cannot determine how the value of a foreign asset in U.S. dollars may be changing over time solely by looking at changes in the exchange rate.”

While it’s a good question, Ayca’s position assumes that any change in the actual value of a foreign asset can be determined by changes in the exchange rates only. Meaning, if the exchange rates change, so does the actual value of a foreign asset.

Not so fast, says the Appeals Court. There is no evidence that that’s the case here. It’s possible, instead, that something like inflation could have resulted in an increase in the nominal value of the asset, for example. And that could offset, in part, the declining exchange rate when converting the assets’ value into U.S. dollars. “[T]he assumption that the nominal value of the asset in the local currency will have stayed constant during the relevant period is hardly self-evident, and it therefore needs to be supported by evidence,” said the Appeals Court. “The key point is that one cannot determine how the value of a foreign asset in U.S. dollars may be changing over time solely by looking at changes in the exchange rate.”


Trial Court Judge Did Not Abuse His Discretion

Equitable Division

So, did the Probate and Family Court judge abuse his discretion by denying Ayca’s requests to apply the updated exchange rate? No, because Ayca told only half the story here. She addressed the changing exchange rate. But she did not address possible changes to the value of the Etiler assets in Turkish lira during the relevant timeframe. And so, she failed to show that she truly received less than half of the marital estate in U.S. dollars.

The Appeals Court said, “[W]e agree with the wife insofar as she argues that the judge could have taken judicial notice of the fact that the exchange rate declined significantly during and after the trial (citation omitted). Nevertheless, we discern no error in the manner through which the judge placed a U.S. dollar value on the Etiler assets. The judge had discretion to choose the valuation date, and there was nothing unreasonable in the judge’s looking to the dates on which the parties’ experts completed their respective appraisals or in relying on the exchange rates in effect on those dates” (emphasis added).


Alimony Amount

By way of her motion at the Probate and Family Court trial, Ayca argued that the judge ordered too low of an alimony amount. She attributed this to the fact that the judge used the wrong exchange rate. Ayca argued that, in doing so, the court overstated her rental income for the Etiler assets. The trial judge denied her motion.

On review, the Appeals Court found the trial court judge did not abuse his discretion by declining to recalculate alimony using an updated exchange rate. Like the above, the Appeals Court acknowledges that the exchange rate dropped significantly. However, the exchange rate is only part of the picture. “[W]e do not know whether there was an offsetting increase in the nominal rental income that the Etiler assets generated,” the Appeals Court said.


The Wife Did Not Justify Periodic Adjustments to Alimony

At trial, Ayca asked the Probate and Family Court judge to modify the alimony order so that alimony would adjust once per quarter based on the fluctuating exchange rate. The probate court judge denied Ayca’s request.

At the Appeal Court level, Guy argued that would amount to a self-modifying order. And self-modifying orders are presumptively invalid and warranted only in “‘special case[s].'”

The Appeals Court again says that Ayca paints an incomplete picture. One can’t look only at fluctuating exchange rates to determine if an alimony adjustment is due. “Whatever else can be said about the propriety of the type of automatic alimony adjustments that the wife proposes, we conclude that she has not justified how her proposal would be warranted here.”


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