Business valuation key in divorce property division

On behalf of Stange Law Firm, PC posted in Divorce on Wednesday, May 2, 2018.

When Missouri business owners consider divorce, they may be concerned about the effect of the split on their family business. In many cases, the most significant asset that a couple has is the business, and it can add complex concerns to the property division process. In order to deal with the business accurately and fairly in the divorce, it is important to establish a proper valuation for the enterprise and look closely at how business income affects the marriage.

During a high-asset divorce, detailed financial information can be particularly important when dealing with the complex issues of valuing a business. Several approaches can be used to develop a proper valuation of an enterprise, including asset, market and income approaches. In all cases, the first steps toward valuing the business come through the financial statements. It is also important for experts to be able to review financial records, tour facilities and speak to managers. Without clear information, the true value of the business could be obscured.

The time of the business’ founding is also important: If the business belonged to one partner before the marriage, only the growth in its value could be part of the divorce negotiations. However, if it was launched after marriage, it would generally be considered marital property in total. There are other issues to be considered as well; for example, it may be inappropriate to receive double recovery from the business. This means receiving both a share of the business and support payments based on a former spouse’s business income.

When dealing with a family business during a high-asset divorce, detailed investigation and record-keeping can be essential. A family law attorney may help divorcing spouses involved with a business to make their case for a proper valuation and seek a fair outcome during the property division stage of the divorce.

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