Dividing The Value Of A Business In Divorce

New York state enacted a property distribution statute in 1980. It provides for the "equitable" -- not necessarily equal -- distribution of marital property. The identification and valuation of business interests owned, in whole or in part, by one of the spouses may present important and sometimes challenging issue in your divorce case.

Business Interests As Separate Or Marital Property

The distinction between "separate property" and "marital property" is often an important one at this phase of your divorce case. Let's say that your spouse has inherited a family business and then spent 20 years working there. What is the business worth and what is your share? The advocacy required to resolve that issue in your favor requires a mastery of the capitalization rates, valuation methods and New York law. Your divorce lawyer should be able to explain to you the "build-up method" and when to use it as opposed to the excess earnings method of valuation. Preparation is essential, and experience counts.

In the courtroom or the boardroom I will bring to the table my experience in reading financial statements, obtaining useful expert reports, and cross examining financial experts. To correctly identify and value the assets and cash flow requires an understanding of New York divorce law, forensic accounting and tax law. Advocacy is also required to connect, or limit, the connection of that asset to the distribution of the marital estate.

Together we will assemble whatever team of investigators and forensic experts is reasonably required. Each member of the team should be knowledgeable and savvy. While no two cases are identical, New York is a big town, in many ways it's a small town. Most of the experts I will recommend in your divorce case are regularly appointed by the courts in other cases, and I have worked with virtually all of them for decades. Many of us are on a first name basis. So I will look in the right direction, and advocate in the most cogent way.

Your divorce lawyer should also be thorough in obtaining and reviewing financial documents. For the divorce lawyer it's the visual equivalent of eating 20 pounds of sawdust, and liking it. I have found many a needle in the haystack of bank records and credit card statements. Many times investors have make sworn statements on their loan applications that come back to bite them in embarrassing places when they are getting a divorce. In one case, the spouse had not provided the bank with the same tax return that had been filed with the Internal Revenue Service. Here too, experience counts.

Decades Of Experience Representing Business Owners

I have more than 35 years of experience as a New York divorce lawyer. I know the language of these courts, and I know how to provide my clients with the best cost-benefit value for navigating the complicated financial reality of divorce. I have represented many high-profile and high net worth divorce clients, and I am adept at using my experience to help my clients garner a more complete understanding of the potential benefits and hazards of their choices. With the Robert G. Smith, PLLC law firm, you will be provided wise counsel and intelligent representation. I want you to be both satisfied with my services and proud of the work we will have done together.

I represent clients with ownership interests covering almost any conceivable business venture, including:

  • Professionals: I have represented independent professionals: doctors, lawyers, dentists and psychiatrists. Those practices are generally valued using the excess earnings method (Revenue Ruling 68-609). New York is the only jurisdiction that identifies enhanced earning ability -- such as the license to practice medicine -- as an asset in addition to contributing to the earnings stream. There may thus be two components of the practice value, the license and the business. Advocacy is then required to connect, or limit, the connection of that asset to the distribution of the marital estate.
  • Corporate executives: Investors and high-level corporate executives present similar challenges. Corporate executives frequently have employee stock options, which are granted before they vest and might be exercised after the divorce action was commenced. The forensic economic experts often use the Black-Scholes method to value these assets. The valuation of the un-exercised stock option in the divorce case can be a complicated process. Part of the value may be separate property, and the part of the value that is marital property may not have a sufficient nexus to the marital partnership.
  • Mom and pop businesses and smaller start ups: Many divorcing couples need to find a way to equitably distribute their family business. This is especially difficult for couples that founded the business together or for spouses who both worked and drew income from the business. Objective, informed and creative lawyering is often crucial to successfully resolve the issues that arise.

As your New York business valuation attorney, I have the skill to valuate your business in a divorce. I negotiate deliberately, efficiently and effectively to divide business assets accurately and fairly in a divorce in a way that all the parties and the court will find equitable.

Call Me Today To Set Up A Consultation

Either call my New York office at 212-499-0940 or contact me online of a free initial consultation.