Helping Spokane Entrepreneurs Resolve Their Divorce Issues
Modern law treats divorce like the dissolution of a business partnership. Under Washington law, both spouses have an individual interest in property that is considered to be part of the marital community estate. When one or both spouses were involved in the creation and development of a business operation, complex property division issues can arise if they get a divorce. If you are a Washington business owner who is getting a divorce, you should consult an experienced Spokane business valuation attorney for legal advice.
At Twyford Law Office, we have:
More than 30 years of legal experience helping entrepreneurs resolve property division issues in their divorces.
The legal prowess to help ensure the hard work and resources you invested in your business are adequately protected.
Attorneys who are always available for their clients, and able to address legal concerns 24 hours a day.
Contact us at (509) 327-0777 for more information about our legal services.
The Importance Of Business Valuations
Business valuation is important when it comes to property division issues. In a divorce, both spouses may try to claim a separate interest in a business they started during marriage. A spouse could also claim a community property interest in a business that would otherwise qualify as their spouse’s separate property. However, if any contribution was made by a spouse, whether labor or monetary, they may be entitled to a portion of the value. Whether an asset is considered community property or property of only one party will also depend upon the date of its purchase or acquisition.
Under Washington law, all property acquired during a marriage is community property. Property that was not obtained during the marriage is considered to be the separate property of the spouse. Additionally, property that a spouse acquires solely in their name through gift, bequest, or devise is their separate property. When spouses get a divorce, a court will divide community property between the spouses.
At Twyford Law Office, we have experience with business valuations for property division purposes in a divorce. We can take care of the following issues:
Appreciation of business capital
Determining the appropriate valuation date
Partition and cost of sale issues
Determining the Value of a Business
When establishing the total value of a business, both the current value and future earning potential must be determined. In general, a valuation will take place as close to the date of the divorce settlement or trial as possible. Common methods used in this process, include:
Asset vs. Liability Method – This is the simplest and fastest approach, which subtracts liabilities from the assets and arrives at a figure that is a rough value of the business.
Market Value Method – This method finds comparable businesses and uses their sale price as a starting point.
Income Method – Involves examining cash flow, profits, salaries, and more to valuate a business over the coming years.
Most often, a financial expert, business valuation professionals, and real estate appraisers will need to be consulted to accurately estimate a business’s worth. It is not uncommon to see both parties hire experts in high-value asset divorces, who will assess the business and testify in court on how they came to their valuation.
In preparation, experts will examine the following financial records:
Profit and loss statements over a certain period of time
Assets, such as inventory, equipment, and real property
Business goodwill: The part of business value over and above the value of identifiable assets recorded in the company’s books (such as a well-known brand name, outstanding customer relations, solid customer base, patents or unique technology, etc.)
External factors will also be considered, such as the type and location of the business, current economic conditions, and future trends that may affect profitability. The business will then be assigned a fair market value and an estimated future earning potential. When there are two competing valuations due to each party hiring a different appraiser, the court may decide to either choose one value or take an average of the two.
Options after a Business Valuation
Once a business valuation is complete, the parties can then decide how they would like to proceed. Examples of options include selling the business and dividing the profits, or continuing to jointly operate it. A spouse who does not want to keep the business, when the other does, can be bought out for the value of the interest in the business or given marital property of equal value.
Why You Need a Lawyer for a Divorce with a Business Valuation
Handling this type of divorce matter requires an understanding of valuation principles, relevant case law, taxation, compensation issues, accounting principles, and general foundational business knowledge. An experienced divorce lawyer will possess this knowledge along with the necessary skills to ensure a business valuation is fair and accurate. There’s also the benefit of gaining access to a wide network of experts, who can have a significant impact on the final settlement or trial result. Since property division is one of the most complicated tasks in the divorce process, hiring a business valuation attorney can protect your current and future financial wellbeing.
Contact Twyford Law Office For Skilled Legal Advice
For many entrepreneurs, their business is like their “baby.” As a result, people can get extremely protective of their business interests. Understandably, you have dedicated your blood, sweat, and tears to creating and growing your business. At Twyford Law Office, we can appreciate the significance your business has in your life. Our business valuation lawyers can handle the legal and financial aspects of valuing your business in a divorce, guiding you through each aspect of the process, so you can reach an informed decision about your legal options – as any caring business owner would.
Call Twyford Law Office at (509) 327-0777 or contact us online today to arrange a free consultation about your case.