Knowing the Value of Your Business Before Filing for Divorce
Small businesses owned by a husband or wife are often considered marital property subject to division. To ensure both parties receive equitable shares of marital assets, it is in both spouses' interests to obtain an independent business valuation.

October 20, 2011 /24-7PressRelease/ -- Knowing the Value of Your Business Before Filing for Divorce

Couples must discuss several issues once they decide to file for divorce and end their marriage. These include alimony, child support, custody and visitation rights, as well as property distribution.

Dividing property is a complicated process made more so when either spouse owns a business. An ownership interest is often considered marital property subject to division among spouses, but it is impossible to fairly distribute interests in a company, as well as its assets, without knowing how much they are worth.

Why Is Business Valuation Necessary?

Courts work hard to divide marital property fairly and equitably between husband and wife. For example, if a court awards one spouse the family car valued at $10,000, then the other partner would receive assets equal to that value, and so forth.

However, valuing a business is more difficult than checking a vehicle's Kelly Blue Book price: assets, liabilities, past earnings and projected future earning must be carefully analyzed to determine a business' fair market value. Speaking with an experienced business valuation lawyer is essential to ensuring both spouses receive equitable shares of a company and prevent costly mistakes.

For example, imagine someone owns a business which they and the court believe is worth approximately $2 million. A judge will decide property distribution and any spousal or child support based on this approximation. If the business sells for $12 million just two years after the divorce is finalized, one spouse essentially lost out on $5 million worth of assets because they did not obtain an independent business valuation and assumed their spouse's estimation was accurate.

Protecting a Business Prior to Marriage

Ohio designates property as either separate or community property. Property a spouse acquired before entering the marriage is generally considered separate, while property acquired during the marriage is considered community property.

Someone who owns a business prior to marriage would undoubtedly like to retain control should the marriage dissolve. In these circumstances, agreeing to a prearranged property distribution plan is essential and a person should strongly consider creating a prenuptial agreement.

Anyone with questions about the importance of business valuations in divorce proceedings, as well as those considering a prenuptial agreement, should speak with a qualified family law attorney to discuss their potential options.

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