How can a business valuation affect your divorce in New York? When a couple gets divorced, the court will divide all marital property equitably. That includes any businesses the couple owns together.
Before the court can divide the couple’s assets, it must determine the true value of any business they own. Business valuation is the process of determining how much a business is worth. The result will determine how assets are divided and can even affect the amount of spousal maintenance. Divorcing couples frequently disagree about the value of their business. A divorce attorney can help you determine the value accurately and protect your financial interests.
Equitable Division in New York
Divorce in New York follows the principle of equitable distribution, which means that the court will divide all marital property fairly. Fairly does not always mean equally, and divorcing couples often disagree about the details of property division.
A business owned by one of the spouses can be separate property or marital property. Separate property includes anything either partner owned before the marriage or received as a gift or an inheritance during the marriage. Marital property includes anything acquired during the marriage.
If a business opened during the marriage, it is usually marital property. If the business opened before the marriage, it may still include marital property if it grew substantially during the marriage. Business valuation is used to determine the value of the business and whether it is separate or marital property.
The Business Valuation Process
Forensic accountants are seasoned professionals in their field who can determine the value of a business. In complex cases, forensic accountants can help trace separate property claims.
Forensic accountants and other experienced professionals will assess tangible assets such as inventory, equipment, and bank accounts, as well as intangible assets like intellectual property or the company’s reputation. They will also assess the business’s income and position in the market. Divorcing spouses may have different opinions about how much the business is worth, so a business valuation can be essential to resolve these issues.
How Business Valuation Can Affect Property Division
The court will use business valuation to determine who will receive what in the divorce. For instance, if the court awards a business worth $500,000 to one partner, it may award a percentage of other property to the other spouse in exchange for their equitable share of the business. In this case, the value of the business determines how much property the other partner will receive. Business valuation has a substantial impact on property division in a divorce.
How Business Valuation Can Affect Spousal Maintenance
Business valuation can affect spousal maintenance or alimony because the court considers the financial situation of both spouses before determining spousal maintenance payments. If your former spouse owns a profitable business, it can increase the spousal maintenance the court will order. Further, in determining the business value, the experienced professional may also determine the reasonable compensation for the business owner. That reasonable compensation amount will be utilized to calculate maintenance.
How Business Valuation Can Affect Child Support
Business valuation doesn’t directly determine child support, but it can still indirectly affect child support payments. Business valuation can show how much income a business produces, which can affect the amount of child support payments.
Contact a New York Divorce Attorney Today
If you’re going through a complex divorce involving business ownership and valuable assets, you need someone to help protect your financial and legal interests. Lisa Zeiderman, Esq., is a matrimonial and family law attorney serving White Plains and Manhattan, New York. She will work hard to protect your interests and fight for your future. For a relentless and high-energy advocate in your New York divorce case, contact Lisa Zeiderman, Esq., today for an initial consultation.