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The complexities of divorce as a business owner

On Behalf of | May 2, 2018 | Divorce, Spousal Maintenance

For people in Minnesota going through a divorce who are also small business owners, the value of the business can be a major issue during property division negotiations. When a couple owns a family business, especially a profitable enterprise, it can be the most valuable asset handled as part of the marital property. In order to properly assess the asset and divide its value, it is critical to first establish a proper valuation for the enterprise.

High-asset divorces involving well-known, profitable businesses can be complex because of the detailed financial information that is necessary to present a true picture of marital property. There are several standard accounting approaches to business valuation, including asset, market and income approaches, and all of them are suitable for use during divorce proceedings. Each spouse’s lawyer will likely need to work with financial experts to establish an independent valuation for the company. While this process begins with a review of financial statements, it can also include more in-depth study such as reviewing original records, interviewing management or touring facilities.

Spouses may have an interest in undervaluing or overvaluing the business in order to boost their position during the divorce, so obtaining accurate information is particularly critical to obtaining a just outcome in the divorce settlement. In addition, some spouses may seek to hide their assets and income obtained from the business to decrease their child and spousal support valuations. In this case, a valuation expert may be able to provide conflicting evidence that exposes previously hidden income.

When a couple’s divorce involves extensive investments, asset division can be complex but also critical. A family law attorney may work with financial experts to defend their client’s position and work to achieve a just settlement in the divorce.

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