If the family business is among the marital assets to be appraised and divided in a divorce, you’re facing a complex task that could have an impact on your finances for years to come.  Often business owners and their fiancés will sign a prenuptial agreement before the wedding to address the issue of the business in the event of divorce.  But what if you don’t sign a prenuptial agreement?  And, what if you start the business during the marriage?  If you disagree on the company’s value, assets, liabilities and/or income stream, you’ll need to hire an independent business valuation expert. Here’s what they do and how they can help.

The first step is understanding whether the business should be considered marital or nonmarital property.  In Missouri, if the business began or a spouse’s interest in a business was acquired before the marriage, it is generally not considered marital property. If the creation or acquisition date falls after marriage, it is marital property so long as marital funds were used for the creation or purchase.  This is true even if the business is only in one spouse’s name.  A business valuation expert can guide you in gathering the necessary documents needed to prove the business is marital or nonmarital property. 

The next step is determining the correct standard of value. The choices are fair value and fair market value. These two standards can result in very different outcomes. The state and court with jurisdiction over the divorce determines which valuation method must be used and how it should be applied.  Some jurisdictions provide specific information about valuing a business; others are less clear, requiring an understanding of case law to know whether certain methods or discounts may be applied. A business valuation that is inconsistent with the jurisdiction’s standards will not be accepted by the court, so due diligence is crucial. In Missouri, fair market value is the standard of value in a divorce.  Make sure your business valuation expert is skilled in your jurisdiction’s standards for valuing a business.  Business valuation experts are all over the country but Missouri has some unique issues related to business valuation so make sure your expert has experience with Missouri-specific nuances in business valuation and divorce. 

Because of the complexity involved with business valuation, an expert business valuation professional is important in helping divorcing spouses navigate the division of assets when one of the assets is a business.  Additionally, hiring an attorney skilled in business valuations in a divorce is also crucial.  The attorneys at Jones Family Law Group have the training, skills and experience in business valuation to help you.  

With a combined 30 years in family law, the attorneys at Jones Family Law Group, LLC, will provide the legal guidance you need. Be sure to follow us on social media, including Facebook, Twitter, Instagram and LinkedIn. Share our articles with others! For questions or to schedule a confidential consultation, contact our team.