Property Division
Property Division

11/13/2017

Property Division and the Family Business

A divorce is complicated enough, but even more complicated when you have a closely held business. If the business is anything more than a simple service business, then you will need a professional to appraise the value of the business and advise you on how to divide the asset. If support is an issue, the supported spouse does not want to deplete the business to the point where the supporting spouse’s business is no longer viable. But the asset still needs to be divided.

Knowing what to expect in the process will help reduce the stress, costs, and time in the divorce. The first step is to determine how to determine the value of the asset. There are two generally accepted methods for determining the value of an asset, Fair Market Value and Fair Value. The third method is Capital Asset Value, which is generally the value of the hard assets, but this article will focus on the Fair Market Value and Fair Value.

A Professioal Appraiser Will Determine the Proper Valuation Method

Fair Market Value is an estimated price that you would receive on the open market if you sold the business to a third party. Of course, this is an estimate because the business is not for sale. But a professional evaluator has tools to assist them in predicting a potential sale price.

The Fair Value measurement is similar to Fair Market Value, but the appraisal is based more on the value of the asset’s use. Typically, these two values will be very different. If you are not able to reach an agreement with your spouse on the value of the business, then the business appraiser will have to explain to the Court why your value is correct, otherwise, the Court may dismiss your proposed value.

Do Not Hide Assets No Matter How Much You May Want To

As the business owner, you may be tempted to hide or transfer assets to a family member or move it to a place that the spouse will not find it. But the problems is, that the other side is likely to already have an idea of the value of the business and how the assets could be hidden. And this is extremely dishonest. If the trickery is discovered, then you could end up with a less then equal division due to the attempt to hide the asset. The most efficient way to divide this asset is to agree on a business appraiser and permit the expert to determine the value. Hilton family law is well connected with the best business appraisers in the area.

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