What's Fair About Fair Market Value? What's Fair About Fair Market Value? By Laura Markee, CFA, ASA, Markee Valuations September 2020 Bar Bulletin September 1, 2020 Imagine a circumstance in which your customers are separating, and the wife is an effective psychologist. For the sake of the example, assume even more that her practice is so successful that she makes over $500,000 each year in her practice, much greater than the market benchmark of $250,000 for solo specialist psychologists with her level of education. In a divorce in Washington State, lawyers need to know when and how Washington's "reasonable value" requirement might come into play in figuring out the worth of a privately held organization. In specific situations, fair market price (FMV) and reasonable worth analyses will lead to significantly different conclusions and attorneys who are uninformed of the application of reasonable value might advise their clients to accept a value for their company interest far below what could be awarded. Definition of Value In organization appraisal, appraisers are most often engaged to determine worth under the fair market price standard. Fair market price (FMV) is specified by the American Society of Appraisers as: "The rate, revealed in terms of cash equivalents, at which residential or commercial property would change hands between a hypothetical prepared and able purchaser and a theoretical willing and able seller, acting at arm's length in an open and unrestricted market, when neither is under compulsion to purchase or sell and when both have affordable knowledge of the relevant facts." Although FMV is the standard of worth in a marital dissolution context in lots of states, in Washington, the reasonable worth requirement is used. Unlike FMV, there is no frequently accepted definition for fair worth.