What is the process for establishing the valuation of a business interest in a Louisville divorce? How will the ownership of a business or Louisville area professional practice be handled in your divorce?
The division of a valuable marital asset such as retirement accounts or business-related assets are both legally and financially complex. This is why it is so important to make sure your Louisville divorce attorneys have extensive experience across many decades in not only divorce, but taxation and business operations and tactics.
How will our Family Court handle a closely-held business, corporate interests and/or a professional practice in a Jefferson County or Louisville divorce case? This matter will be addressed during the classification of property and debts and the division of property.
The primary issue to be established is the nature of the business or professional practice from the perspective of marital property. Is the asset in question a marital asset, the separate property of the business owner, or a commingled asset (basically, a blend of both marital and separate property).
When was the company or professional practice formed? When did the spouse acquire an interest in the business itself? Did the spouse acquire or begin the company before the date of the wedding, or during the course of the marriage?
In most cases, any asset such as a business interest that was obtained sometime in between the date of the wedding to the date of separation is going to be considered to be “marital property” in the eyes of the Family Court. Marital property in a Kentucky divorce is to be “equitably divided” between the parties.
If the business interest or practice in question was formed or obtained by the party before the marriage, the asset may be characterized as the separate property of that spouse, and therefore the former spouse has no legal or financial interest in that property or asset.
However, even if the business or professional practice in question was obtained prior to the date of the wedding or the date of separation, there still can be issues associated with its characterization during the division of marital property. Was there any marital funds, labor or assets used to support or enhance the business or practice? If so, a complex calculation may be required to establish the portion of the asset that is subject to marital property division outside of the separate property interests of the spouse in ownership.
Establishing the valuation of a business interest in a Louisville divorce is a separate and more complex issue. If the asset is considered to be marital property or a commingled asset the Court will require an accurate valuation of the former spouse’s ownership interest. It is interesting to note the parties interests in valuation or completely in opposition to one another.
The owner of the professional practice or company wants the valuation of their interests to be as low as possible. This means they will have to offset a lower amount when it comes to marital property division. The spouse of the business owner obviously wants the valuation to be as high as possible, as this increases the amount they will receive during property division.
The Court has several options to establish the actual valuation of the business interests at hand. What is the “Valuation Date” – the date for which the valuation of the interest is deemed to be “relevant”? Will the Court appoint an expert to establish the valuation or will each party provide their own expert opinion on this matter. In some cases it is all of the above.
The next question is they type of valuation to be applied. Is the valuation to be based upon the “Standard of Value,” the “Investment Value,” the “Fair Market Value” or some other method to determine the “Intrinsic Value” of the asset or ownership interests.
Generally speaking, the appraised valuation of a business interest will be based on its assets, income or the market, depending upon the nature of the asset itself. Establishing the valuation of a business interest in a Louisville divorce is usually a very contentious process as the two sides vie over the genuine valuation of the property and the resulting amounts to be awarded to each spouse during marital property division.
If you are involved in a divorce in Louisville or anywhere in Jefferson County or the surrounding region and one of the spouses (or each spouse) has an interest in a professional practice or closely-held company you will need the extensive, proven experience of the divorce and family law attorneys at Dodd & Dodd. We will work diligently to protect your goals and objectives for the divorce and your interests in all property division matters.
We invite you to review the strong recommendations of our former clients and the legal industry and contact Dodd & Dodd or call 502-584-1108 to schedule an appointment with one of our attorneys.
