Business valuations can be difficult. Having a basic understanding of property division in your state can help to better ensure a fair split of property during the divorce.
Legal issues abound during a divorce. A number of these roadblocks can arise during the property division portion of the divorce proceeding. One that can become very complicated involves determining how to split business interests.
How is property divided in Alabama?
In order to understand how business interests are handled during divorce in Alabama, it is important to know the basics about the property division process. Alabama is an equitable distribution state. This means that property is divided in a manner that is deemed fair. This does not necessarily translate to an equal split. Instead, the court will take a variety of factors into consideration when making a determination on how to distribute the marital property. These factors can include the length of the marriage, the age and health of each spouse, the standard of living and the ability to earn income after the divorce as well as any potential tax consequences of a proposed distribution.
Property that is classified as marital property is subject to division. This includes any property gained during the marriage. Even businesses started prior to the marriage can qualify. In these cases, the amount the business grew during the marriage is generally subject to division.
How is a business valued?
The worth of each asset must be known before the property is properly split. Some assets, like checking accounts, are fairly easy to determine a value. The amount in the account provides a good representation of the worth of the asset. Others, like real estate, are a bit more complicated. For these assets it is generally wise to get a few estimates from experts in the field to determine the value of the property. Still others, like business interests, can be much more difficult to value.
One difficulty involves simply getting paperwork to help determine the worth of the business. Ideally, this information should come from a third party, like a bank statement or tax paperwork, as opposed to an estimate provided by the spouse who holds the business interest. The temptation to fudge these numbers is too great and the opportunity should be avoided.
If a spouse is uncooperative in providing this information, a forensic accountant can dig into the matter.
How can I better ensure a fair property split during my divorce?
Navigating the valuation of a business is difficult and is only one of the many legal issues that can arise during the divorce. As a result, it is wise for those who are going through or considering a divorce to seek legal counsel. An experienced attorney can guide you through the process, better ensuring your legal rights are protected.