How to Value a Spouse's Business in a Divorce

When divorce begins, it's quite common for the husband or wife of a business owner to feel vulnerable. After all, if they've been left out of the loop, they have no true understanding of the finances of the business. Moreover, they fear their spouse will hide assets, or even follow-through on their threats or tricks to leave their partner with no part of what is, most likely, one of the largest assets in the parties' joint marital estate.

For starters, consider these two pieces of advice: first, don't listen to your spouse. Instead, when you want to know what will happen on your day in court, do some reading of your own. Secondly, do more research on family-owned business problems in divorce.

What follows is the overview of what you should be focusing on:

1. When two parties divorce, and one has a business ownership interest, one spouse wants the business to be as big as Warren Buffet's empire, and the other wants it to look like the business is going under (I refer to this as "RAIDS" - Recently Acquired Income Deficiency Syndrome).

2. The problem is that business owners have many options to hide money or control the finances and how they are written up on tax returns.

3. Our attorneys most commonly start the discovery process by sending a request for production of documents. Along with the help from our business valuation experts, we look for: phantom employees that don't exist, business property leased from unknown people or corporate entities, an unusual imbalance between earnings and assets, and improper personal expenses flowing through the business.

Business owners have real opportunities when it comes to divorce. At the same time, many spouses go without rightful property division, child support and alimony because they don't have the energy or know-how to discover the truth. You owe it to yourself - and to your children - and our attorneys encourage you to contact us for a no-obligation consultation.