As part of the dissolution process, all property must be characterized and evaluated. In many circumstances, one or more businesses exist that belong to the marital community. Unless there is a prior agreement indicating otherwise – premarital or postnuptial – the business will be divided to the spouses equally as community property. Quite commonly the business will be a small family owned and operated concern, and as such, valuation cannot be determined in the same manner as a publicly traded corporation, which has stock and other measurable values. It is essential to obtain qualified advice from an experienced family lawyer to determine how to proceed in dividing your business.
The Three Essential Steps to Dividing Business Entities
There are three essential steps that are required before property can be divided in California:
- Characterization – whether the property is community property or separate property.
- Valuation – what is the value of each asset in the marital estate.
- Division – after the property is valuation it can be divided to the parties.
There are different methods that are utilized to assess the value of the business. Additionally, experts such as certified public accountants and tax specialists utilize their own particular methods during the process. It is absolutely essential to obtain the guidance of your family lawyer to help you during the various phases of the dissolution process.
Businesses May Include Tangible and Intangible Assets
Businesses assets may vary considerably. Some assets are tangible and others are intangible. In most cases, but not all, tangible assets are easier to assess:
- Cash
- Property
- Machinery
- Equipment
- Inventory
- Account receivables
Intangible assets are often extremely difficult to assess:
- Patents
- Trademarks
- Copyrights
- Business relationships
- Unique skills
- Product development ability
- Business development in progress
- Many other
Valuation:
There are three basic approaches to measuring assets:
- Asset – value of asset minus liabilities
- Income – determining future income
- Market – determining the worth of the business in the present marketplace by comparison to other similar businesses
Complimentary Phone Consultation with a San Diego Division of Business Entities Yelman & Associates Family Law Attorney
If you are preparing to obtain a dissolution of marriage, or if you seek post judgment modifications, the Family Law Attorneys at Yelman & Associates can help you in all aspects, including business division valuation and division. We have immense experience in all areas relevant to marital property division. We are experienced professionals and we deliver results. Business division can be extremely difficult and if you do not pay particular attention to detail it could cost you a significant amount of money. We utilize accountants, economists and other specialists when it is appropriate in order to come to a proper valuation. For a complimentary consultation with a Yelman & Associates Family Law Attorney, call us at (619) 282-1107, or (760) 480-8400.
