{"id":13235,"date":"2022-10-14T08:09:33","date_gmt":"2022-10-14T13:09:33","guid":{"rendered":"https:\/\/gbfamilylaw.com\/?post_type=videos&#038;p=13235"},"modified":"2023-09-07T10:03:02","modified_gmt":"2023-09-07T15:03:02","slug":"how-is-a-business-valued-in-divorce","status":"publish","type":"videos","link":"https:\/\/gbfamilylaw.com\/videos\/how-is-a-business-valued-in-divorce\/","title":{"rendered":"How Will the Valuation of My Business Be Determined During a Divorce?"},"content":{"rendered":"<div class=\"embed-container video-single\"><iframe width=\"560\" height=\"315\" src=\"https:\/\/www.youtube.com\/embed\/an2CECjEZ7c?rel=0\" frameborder=\"0\" allowfullscreen><\/iframe><\/div>\n\n\n\n<p>Complicated property matters in a divorce often involve property where the fair market value is not easily determined or readily available. For instance, when you own a business, the court may need to determine the fair market value of the business during the divorce process. Many times, this valuation is complicated because an individual spouse does not own the business: It is held within an entity like a corporation, a partnership, or a limited liability company. Sometimes, the spouse does not own 100% of the business but has partners, which also impacts the valuation process. In some cases, the asset to be valued is held inside a trust, further complicating the valuation process. In the best-case scenario, you&#8217;ll have settled this issue on your own before you go to court, but often, people need outside help.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Valuation With a Written Agreement<\/h2>\n\n\n\n<p>In some cases, couples who own a business together will have entered into a written agreement and decided ahead of time how they will value the business in the event of a divorce. Under Texas law, when the owners of a business have entered into a written agreement with a process for determining value in the event of divorce, the courts will follow the valuation as agreed on by the owners.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Valuation Without a Written Agreement<\/h2>\n\n\n\n<p>In cases where the owners have not entered into a written agreement to establish the value of the company or value of a partner&#8217;s ownership interest in the event of divorce, the process is more complicated.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Can I Enlist the Help of a Business Valuation Expert to Ensure an Accurate Assessment of My Business&#8217;s Worth?<\/h2>\n\n\n\n<p>Yes, and you absolutely <em>should<\/em> request a business valuation from an expert to determine the fair market value of your business. The valuation expert will rely on their specialized training and experience as they review the assets and cash flow of the business and form an opinion as to what is the fair market value of the marital interest in the business. For many cases, this involves looking at not only financial documents, but whether the business is asset-intensive, like a trucking company, or more of a service business, like a law firm. Texas courts have approved a methodology for business valuation that follows the Internal Revenue Service regulations for&nbsp;<a href=\"https:\/\/gbfamilylaw.com\/services\/property-division\/business-valuation-in-divorce\/\">valuing a business<\/a>&nbsp;when the owner dies. That valuation process is used for estate tax purposes, but we use the same methodology in Texas for valuing a business and the owner&#8217;s interest in a divorce.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What Specific Documents or Evidence Do I Need to Gather to Support the Valuation of My Business?<\/h2>\n\n\n\n<p>Analysts might ask for different documentation in different situations, but here is a list of what you can gather to prepare:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The past five years&#8217; financial statements and income tax returns<\/li>\n\n\n\n<li>List of assets and debts of the business<\/li>\n\n\n\n<li>Aged accounts receivable and payable<\/li>\n\n\n\n<li>Contracts<\/li>\n\n\n\n<li>Budgets and financial projections<\/li>\n\n\n\n<li>Marketing materials<\/li>\n\n\n\n<li>Documents and information particular to the industry<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">What if We Still Can&#8217;t Agree on the Value of the Business in Our Divorce?<\/h2>\n\n\n\n<p>If the divorce case goes to trial, the judge will make a determination as to what is the value of the marital interest in the business. For spouses who have hired their own valuation experts, each of those experts may testify during the trial. The judge is not bound by the opinions of the experts but will make their own findings as to what is the value of the marital interest in the business at the time of the divorce.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">During a Division of Assets, How Are Both Spouses Fairly Compensated?<\/h2>\n\n\n\n<p>Depending on the value of the business and the value of other assets, the court may award the business to one spouse and award assets of equal value to the other spouse so that there is a fair and equitable division of the marital estate.<\/p>\n\n\n\n<p>In cases where there are not enough other assets to equalize the division, one spouse might still be awarded the entire business and the other spouse would be awarded money to equalize the division. In those cases, the judge will establish and order not only the amount of money to be paid, but also a payment plan and an interest rate. Often, the judge will assign security or collateral for the amount to be paid as well. This collateral will usually include the business interest being awarded to the other spouse, but it might also include other assets.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Work With an Experienced Attorney Who Can Help You Reach a Fair Resolution<\/h2>\n\n\n\n<p>For business owners faced with an imminent divorce, working with an experienced and knowledgeable lawyer is crucial. Whether it&#8217;s a corporation, partnership, limited liability company (LLC), or trust The right lawyer will know how to effectively navigate a fair valuation of the shared business and division of assets.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Learn More<\/h2>\n\n\n\n<p><a href=\"https:\/\/gbfamilylaw.com\/attorney\/jeff-shore\/\">Jeff Shore<\/a>&nbsp;is board-certified in family law by the Texas Board of Legal Specialization and rated &#8220;AV&#8221; by his peers, the highest rating in legal ability and ethical standards. His experience with civil business litigation helped to hone his business acumen and technical skills, so he&#8217;s well-equipped to handle complex divorces involving business valuation. Shore works hard to protect the interests of business owners and help non-moneyed spouses to secure the resources they&#8217;ll need for their lives after divorce.<\/p>\n\n\n\n<p>For more information on how to divide complex estates in divorce, please contact&nbsp;<a href=\"https:\/\/gbfamilylaw.com\/attorney\/jeff-shore\/\">Jeff Shore<\/a>&nbsp;at 214-473-9696.<\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Partner Jeff Shore explains how property is valued in divorce and what to expect if you own complex property.<\/p>\n","protected":false},"author":3,"featured_media":13432,"template":"","tags":[],"class_list":["post-13235","videos","type-videos","status-publish","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How Will the Valuation of My Business Be Determined During a Divorce?<\/title>\n<meta name=\"description\" content=\"Business owners going through a divorce will need a valuation of their business in order to protect their assets. 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