Small Business Valuation In Divorce

Equitable distribution is typically one of the most complicated and involved aspects of a divorce in New Jersey, and the proceedings can become more complicated if the parties have to begin the process of determining the value of a small business. Going through a divorce in New Jersey can be difficult on all involved, including business partners of the divorcing business owner. This becomes especially true during the equitable distribution phase, which requires the parties to value and divide property and assets. During this phase, emotions can run high and the stress can be overwhelming. In the case of Rothman v. Rothman, the New Jersey Superior Court framed the elements for the valuation of a business for equitable distribution in divorce cases. The New Jersey courts are to consider and identify: 1) the assets of both parties; 2) value the assets of the parties; 3) determine how the assets are to be divided. A small business will generally be valued by a court-appointed forensic accountant or professionals retained either jointly or independently by the parties. When there is more than one evaluation, the values provided often differ substantially. During the discovery phase of the divorce, each party will have to provide information pertaining to his or her interest in the business. If some of this business information is confidential or proprietary, the parties can execute a confidentiality agreement to protect this information from reaching the public. The accounting and record books of the business will be analyzed and evaluated by the forensic accountant as well as by each party's lawyer. In addition, depositions will most likely be taken with the parties and anyone else that has information regarding the business that may be important to the valuation process. In many cases, one party has very little knowledge regarding the other party's business, especially if he or she was never involved with it. Throughout the valuation process and during discovery, all parties to the divorce should be made knowledgeable about all aspects of the business If you have questions regarding a small business divorce or the process of equitable distribution in New Jersey it is advised that you consult with an attorney with experience in this area of the law. For more information on small business divorce, equitable distribution, or other Family Law matters in New Jersey visit NJCivilUnionLaw.com and HeatherDarlingLawyer.com. This blog is for informational purposes and in no way intended to replace the advice of an attorney

Complicated Divorces Can Grow From Business Ownership

Whether you are a contractor, an accountant, a professional entertainer or operate a manufacturing plant, your spouse or civil union partner can seek a portion of your business proceeds and assets in a highly contested divorce. When one or both parties to a divorce owns a small business, the business can complicate divorce proceedings as the divorcing couple attempts to equitably distribute assets. During divorce proceedings, a party may seek an interest in the business and substantial alimony which will allow them to continue to enjoy the lifestyle provided by the hard work of the business owner during the marriage. A divorce can create major issues for the business owner and their business partners. New Jersey courts provide for wide discovery rules. Judges can authorize either party to request a very wide scope of documents and information regarding the business and its value. Further, this means that all of the documents, unless there is a confidentiality order, will become part of the public record. If business information becomes public record it will become available for all competing businesses to view which may result in the loss of your business' competitive advantage. In addition, courts will attempt to ascertain the fair value of the business which is distinguished from the fair market value of the business. This process can become very complicated. The valuation of the business will depend a great deal on the business' demonstrated cash flow, assets, accounts payable and receivable statements, payments of insurance, travel, vehicle expenses and other typical business write-offs as well as payment of pension plans to employees, and other factors. During the divorce, a party may seek an equitable interest in the business. It is difficult to determine just how much of an interest a spouse is entitled to because, as previously mentioned, there are factors such as the fair value of the business which are specific and particular to each individual situation. Even if a business was started before the parties were married, or the owner became the owner through an inheritance, the other party is entitled to seek an equitable interest in the appreciation in the value of the business that occurred during the marriage and even the term prior to the marriage where the parties lived together as a family depending on the facts. Cash flow from a closely-held or family owned business is often the main or sole source of income for a person, a family,or families. Whether you are the business owner or the supported spouse, it is critical that you obtain experienced legal counsel to guide you through discovery, the business valuation process and the divorce itself. For more information about small business divorce, alimony, equitable distribution or other family law matters in New Jersey visit NJCivilUnionLaw.com and HeatherDarlingLawyer.com. This blog is for informational purposes and in no way is it intended to replace the advice of an attorney.