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Valuation Of A Business In Divorce Calculations

  • By: Eric Hannum, Esq.
  • Published: May 11, 2015
Valuation Of A Business In Divorce Calculations

If you are a business owner in New Jersey, coming up with a valuation of your business may become an important component in your divorce documents.

You’ll be filling out a Family Case Information Statement, which requires you to reveal your income and the source of your income. It also requires a balance sheet of assets and liabilities.

Revealing your financial details for use of the court and also for your spouse’s attorney is a very serious matter. Intentionally or accidentally omitting information can subject you to legal consequences, so you are best advised to prepare all portions of the information statement with the advice of your family lawyer.

How you state the value of your business depends on the specific type of legal entity and the percentage of ownership involved. While your accountant will be able to provide the basic information you need, how it’s presented to the court can make all the difference in your eventual financial obligations to pay child support and alimony, and to divide marital assets. That’s why you need the advice of your family lawyer as well.

Valuation of a closely-held business is often the most controversial facet when determining family assets in a divorce matter. Whether or not both spouses have ownership or personally work in a family-owned business, valuation can be a deeply divisive issue in their divorce negotiations.

Since the New Jersey Supreme Court established precedent in two different cases in 1999, (Balsamides v. Protameen Chemicals, Inc., 160 N.J. 352, 368 (1999) and Lawson Mardon Wheaton, Inc. v. Smith, 160 N.J. 383, 397 (1999) divorce courts have understood that, “valuation of a closely-held business is not an exact science.”

In other words, there is no authorized calculator you can use to arrive at the perfect valuation. Neither you nor your spouse can rely on an easy worksheet of any kind.

All the financial accounting you offer the court should be accompanied by a rider to the Family Case Information Statement, a separate document, clearly explaining your rationale for the business valuation you present. Helping the court understand how you arrived at your valuation is a very significant feature of the information, the numbers you provide on the form.

If you need to establish a business valuation when filing a Family Case Information Statement in New Jersey, call us for a no-obligation consultation, (732) 365-3299. Or email us to make an appointment and discuss your situation.

Eric Hannum, Esq.

The Law Office of Eric B. Hannum Esq., LLC prides itself
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