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Deciding between valuation and calculation with divorce assets

On Behalf of | Aug 29, 2016 | Divorce |

A couple operating a joint business may find that there are significant challenges in dividing such an asset if divorce becomes a consideration. A California judge could be relied upon to decide how to fairly split a family business as proceedings reach the court system, but some couples may want to avoid having an outside party make these decisions. An understanding of value is essential for making any decisions about dividing a business in divorce, and this could be accomplished through valuation or through calculation.

Valuation is the more formal, accurate, and thorough option for finding the worth of a business. This can be a costly endeavor and may take an extensive amount of time based on the type of business, its structure, and involvement of other parties in the venture. Calculation is less formal and less accurate. However, this can be an excellent choice in some divorce cases, especially if a couple is interested in an efficient resolution to their proceedings with a focus on cooperation and compromise.

In many cases, a substitute asset may be considered as a trade-off for one spouse’s interest in a family-operated company. In other cases, a spouse might want to protect a business from the other party. Issues such as owning the business before the marriage might play into such a situation. In an amicable divorce, spouses might consider retaining their shares of the company and continuing to work together in a professional manner. However, some might view the continued involvement of an ex-partner as a risky business move.

People who are considering divorce proceedings might want to discuss their full financial status with a divorce lawyer before initiating the action. In some cases, a lawyer might recommend important financial steps to take in advance of the filing.