Do I Need a Business Valuation If I Am Getting Divorced?

Under North Carolina’s equitable distribution laws, all marital property must be valued as of the date of the parties’ separation. If you or your spouse own a business that is marital property, then the business must be valued for purposes of equitable distribution. It is well-established that when neither party presents credible evidence as to the value of an asset, then a trial judge may decline to value and distribute such asset as part of the division of the parties’ marital property and debts.

If either party has a small business that has few assets and generates little income, the parties may be able to agree on a value of the business. An ownership interest in a corporation, partnership, professional practice, or sole proprietorship qualifies as an interest in a business. Depending on the type of business, your attorney may recommend that you retain an expert business appraiser (sometimes referred to as a business valuator) or a CPA who is an Accredited Business Valuator to perform a business valuation and determine the fair market value of the business. Business valuation can be a complex process and there are different formulas and methods that are considered appropriate depending on the type of business. Having a business valuation performed by a reputable business valuator will help to ensure that your marital property is divided in a fair manner.

Additionally, if you or your spouse own a business and are self-employed, it may be necessary to have a CPA review the business tax returns and other pertinent financial records to determine expense reimbursements or in-kind payments that may be includable as additional income for the party who is self-employed. When there are claims for child support or spousal support that are at issue in a case, certain expenses that are paid or reimbursed by a business, such as a cell phone or car payment, may be included as income for purposes of determining a party’s ability to pay child support or spousal support or, on the other hand, or in a deposition whether a party seeking support may have greater income or less personal expenses.

Your family law attorney can advise you based on your unique circumstances whether a business valuation is necessary and/or whether business financial records should be reviewed to determine whether a party has potentially greater income. Many family law attorneys have a network of qualified and reputable CPAs and business valuators that they routinely work with who are willing to testify as an expert witness at court or deposition regarding their business valuation or other matters for which they have been retained.

The information contained in this article and throughout this website is correct and accurate as of the date of publication of the content. While accurate and informative, the content is provided to help you make decisions in choosing a lawyer to help you through your divorce. You should not rely on this general information as legal advice. Please seek advocacy with an experienced family law attorney in order to gain full understanding of the elements of your family law matter. Daphne Edwards is available for comprehensive and confidential consultation by appointment. Call 919-833-3114 to schedule yours today.