Dealing with business assets during a divorce

On Behalf of | Aug 16, 2018 | High Asset Divorce |

New Jersey residents who are getting divorced will discover that dividing assets can be a complex and lengthy process. This is particularly true if one or both partners own a business.

To ensure a fair division, both parties have to be aware of exactly what the business is worth. There may be a concern about balancing the valuation of the business against any child support or alimony obligations the owner may have. There may also be an issue of trust regarding whether the spouse who owns the company is being completely forthcoming about the business income.

Spouses can use one of three methods of determining a business’ value. They include the market, income and asset approaches. An analysis of the financial statements for the business is a starting point for all three methods. However, for spouses who have no part in the daily business operations, they should not let the discovery end there.

The valuation professionals of both parties should have the same level of access to the company’s financial records. They should also have equal opportunities to interview management and examine the facilities. If the discovery part of the valuation is not conducted in full, the appraisers may not be able to provide an accurate value of the business.

For business interest that was owned before the marriage, using only the appreciation in the business value that accumulated during the length of the marriage may be appropriate. However, the laws of the state in which the business exists and the factors of the case will determine whether this is a viable option.

A divorce attorney may ensure that the division of business assets in a high-asset divorce is conducted properly. Legal counsel could oversee the valuation processes and potentially litigate to obtain fair division terms.



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