Business valuation can be key in divorce settlements

| Feb 20, 2018 | Uncategorized

The financial aspects of a divorce can be some of the most challenging and troublesome parts for Illinois couples, especially when the marital assets are complex. In many cases, a family business may be the most valuable property in the marital estate and a settlement based on its value could be essential to the resolution of the divorce. When dividing such an asset, there can be a number of questions to resolve, including the proper valuation of the business, dealing with its value in relation to spousal support and other assets and ensuring proper reporting of income related to the business.

Discovery in a divorce that involves complex assets must first prioritize establishing a value for the business. This can take the form of several different approaches, including the market, asset and income types of valuation. In each of these cases, studying the financial statements of the business is essential to establishing a correct valuation. Further discovery can also be important, especially when one spouse is less familiar with the ongoing financial aspects of the company. This can include interviews with management and site visits.

If one party is concerned that the other is using the business to hide assets, this can be a major issue in the divorce. Some spouses may attempt to downplay their income level or the extent of their assets by hiding the company’s true value. In other cases, a spouse may exaggerate the liabilities of the business in order to achieve the same goal.

Property division is often a cause of many divorce disputes. In some cases, it might be wise for estranged spouses to let their respective family law attorneys and financial advisers take the lead in negotiating a settlement.

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