Delaware County Divorce Business Valuation Attorney
Business Valuation in a Delaware County Divorce
A business valuation is the process of determining the value of a business. Certified appraisers use specific procedures to accurately estimate the economic value of a business and/or an owner’s interest in the business. All areas of the business are analyzed to determine their worth during the valuation process. In divorce proceedings, a business valuation is usually required if the marital property being divided between the spouses includes a business.
Why Is an Accurate Business Evaluation Important in a Divorce?
Pennsylvania is an equitable distribution state. When a couple divorces, marital assets and debts are not necessarily divided equally. They are divided fairly, considering the circumstances. Only marital property is divided, not separate property acquired before or after the marriage or through gift or inheritance.
Business interests acquired during a marriage using marital funds are generally considered marital property, subject to equitable distribution. However, if one spouse operates the business, the other spouse may not be aware of its true value. The first step in dividing a business in a divorce is to get an accurate business valuation. Once the true and current value of the business has been determined, it can be equitably distributed between the spouses.
What Issues Can Affect Business Valuation in a Divorce?
In Pennsylvania, tax consequences and expenses associated with the transfer or sale of a business are subtracted from its value for purposes of equitable distribution in a divorce. Another issue that comes up in divorce business valuations is goodwill value. Whether it is included in the valuation and subject to marital distribution will depend on whether it is corporate goodwill or personal goodwill. Corporate goodwill based on the reputation of the company will be included. Personal goodwill, attributed to an individual, will not be included.
How Is a Business Divided in a Delaware County Divorce?
If divorcing spouses cannot reach an agreement, the court will determine how the business will be divided between them. Circumstances of the individual parties are a significant factor family court judges consider in distributing this type of marital asset. Among other factors, the court will consider:
- Financial implications for both spouses
- Who invested the most time and money into the business
- Whether one spouse ran the business while the other did not
- Tax implications of sale or transfer of the business
- Terms of any existing prenuptial or postnuptial agreement
Does Each Spouse Get a Share of the Business with Equitable Distribution?
When the court decides how marital assets are distributed, there are a variety of options available. Instead of giving each spouse a share of the business, a judge may decide to distribute the business interests entirely to one spouse and give the other spouse something of comparable value, such as the family home. If the court awards each spouse a share of the business, one spouse could buy out the other spouse, or either or both spouses could sell their business interests to a third party.
How Can a Delaware County Divorce Lawyer Help?
The process of dissolving a marriage can be even more stressful and complicated when a business is involved. An experienced Delaware County divorce attorney can guide you through the process, provide sound legal counsel, protect your rights, and assist you with all legal and financial aspects of your divorce. We work with seasoned professionals to ensure your business valuation is accurate and use our knowledge, skills, and resources to ensure you receive your fair share of the business.
Contact the Law Offices of Sheryl R. Rentz, P.C. at (866) 290-9292. We have extensive experience handling high asset divorces and a wide range of family law matters in Delaware County.