0:04
so there’s two parts to determining a
0:06
distribution of a business asset the
0:08
first part is you have to figure out
0:10
actually the value of the business and
0:12
the second part is you need to figure
0:13
out what is the
0:15
percentage that your client will
0:18
actually achieve or the other client
0:21
will pay out in terms of that percentage
0:25
so in New York it’s pretty rare to have
0:28
a 50/50 split of a business business
0:30
asset so we should be clear about that
0:32
the range is anywhere from I would say
0:35
20% to probably
0:37
40% sometimes someone Works in a
0:40
business who is the non-titled spouse to
0:42
the business so they may be actually a
0:45
big factor in the business and then
0:46
maybe they reach something like 45% and
0:49
in that rare case 50% but you’re usually
0:52
not talking about a 50/50 split of a
0:54
business asset and you’re not talking
0:56
about getting the business asset usually
0:59
you’re talking about a payout a lumpsum
1:02
payout whether it be over time perhaps
1:05
with interest or whether it be a lumpsum
1:08
payout that you will receive at the time
1:09
that you settle your case or after a
1:12
trial of the matter now it’s complicated
1:15
you may need a forensic accounting firm
1:17
or an accounting firm who can value the
1:20
business that’s something that needs to
1:22
happen and there will be various
1:24
documents that have to be produced
1:26
whether you own the business or the
1:28
other person is actually looking to get
1:29
get their share of the business there
1:32
will be a lot of production in terms of
1:34
documentation I mentioned earlier
1:36
General ledgers for example you will be
1:39
actually asked to produce the general
1:40
ledgers probably in Native format so
1:43
that it will be much easier for the
1:45
accounting firm to go through it and you
1:47
will be asked to produce loan documents
1:50
financial statements credit card
1:52
statements bank accounts um you may be
1:55
actually asked to have Partners come in
1:58
and have depositions these are all
2:00
things that could happen in order to
2:02
Value the business what the valuator is
2:05
trying to do is to figure out what the
2:08
value would be if two um willing parties
2:12
were actually buying buying and selling
2:15
the business and they’re looking at
2:18
normalizing certain things when they’re
2:20
doing this so they are normalizing for
2:22
example the expenses of the business you
2:25
may have a situation where people are
2:28
paying personal expenses at of the
2:30
business well that wouldn’t necessarily
2:32
be a normal expense of a business and so
2:35
they will be deducting those actual
2:37
expenses that are being paid out of the
2:39
business you may be paying rents to
2:41
someone who is a family member who may
2:43
own the property on which the business
2:45
is actually being conducted the rents
2:48
may be higher than what is normal and so
2:51
you may be looking at normalizing the
2:53
rents you may normalize the salaries and
2:56
the compensation of both the owner and
2:59
some of the other employees so there may
3:01
be a whole host of of things that are
3:04
done including discount rates that are
3:07
taken including figuring out what a cap
3:09
rate is so there is a whole host of
3:12
things that are done to Value the
3:13
business now you have the second part
3:16
what was the other spouses the
3:18
non-titled spouse to the business what
3:20
was their
3:21
contribution it can be direct or
3:25
indirect so did they help raise the
3:27
family while someone was out building
3:29
the business that’s important did they
3:31
go to the dry cleaners cook the meals
3:33
you know pick up the kids do all of that
3:35
so that someone actually could be
3:37
working in their business and traveling
3:39
for business and taking out clients for
3:41
business did they socialize with people
3:44
in the business and clients that would
3:46
be important to the business these are
3:48
all things that we look at in terms of
3:51
contribution so did they actually work
3:54
in the business well that’s a direct
3:55
contribution and so the percentage that
3:58
you may be entitled to because of a
4:00
direct contribution will get higher than
4:02
for indirect contributions but they’re
4:05
all contributions and so you want to
4:07
figure out what was the assistance level
4:10
of the non-titled spouse in this
4:13
business and then come to some agreement
4:15
on percentage in New York it’s very rare
4:18
for the non-titled spouse to actually
4:20
have an ownership interest in the
4:22
business after the divorce it it’s very
4:25
rare because it’s really you want to
4:28
separate the party ities as much as you
4:30
can and having them be in the same
4:32
business particularly when it may be the
4:34
non-titled spouse who didn’t work in the
4:36
business and really doesn’t understand
4:38
how the business works and can’t add in
4:40
a meaningful way to the business it
4:42
would be best to separate out the
4:44
spouses therefore we have to figure out
4:46
what is the percentage of the value that
4:50
the non-titled spouse will receive at
4:53
the end of a divorce in New York it’s
4:55
usually not 50% I’m going to tell you
4:57
that I know that’s disappointing to some
4:59
people
5:00
but unless you’re really involved in the
5:02
business per se on a day-to-day basis or
5:05
the marriage is very long or this some
5:08
other reason it’s likely not to be 50%
5:11
it could be anywhere from 20% to 40%
5:14
sometimes if you’ve been involved in the
5:16
business to some degree maybe it’s 45%
5:18
of the marriage is long but essentially
5:21
for the non-titled spouse there’s going
5:23
to be a payout and the other spouse the
5:26
spouse who owns the business is going to
5:28
receive the business so that they can
5:30
carry on