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Don’t Believe Your Spouse’s Valuation of Their Business in a Divorce

On Behalf of | Dec 7, 2019 | Professional Practice & Business Ownership

You should never believe your spouse’s valuation of their business or professional practice in a Carlsbad or North County San Diego divorce.  Many businesses, LLCs, corporations and professional practices establish a value of an ownership interest in the corporate documents of the entity.  These values are usually fictitiously low and will not hold up to the scrutiny of a divorce.

If your spouse tells you “the value of my business ownership interest is $10,000 – see, it’s right here in the operating agreement,” don’t worry.   The valuation of a business interest or professional practice in a divorce is much more complex, and will not be based upon some false number placed in the corporate documents.

The value of a business interest or professional practice is established by experts who use one of several techniques to establish an appraisal based upon the nature of the business or practice itself. Each party will usually have their own expert and it will come as no surprise that the business owner’s expert will have a much lower appraisal than the opposing spouse’s expert will provide.

This is why it is so important to work with the proven, experienced Certified Family Law Specialists at Burke & Domercq, APC.  Our partners each have decades of experience in these cases and work to protect our client’s interests in the valuation of a business or professional practice.

The valuation should be based upon at least a 3 year look-back to avoid any attempt to minimize income or manipulate the books in the months leading up to a divorce.  It is not uncommon for a business owner to plan these actions long before a divorce is filed in order to make it appear the business is much less valuable.  A lower valuation means the spouse who owns the business will have to pay the non-ownership spouse much less in order to keep the business after the divorce.  The valuation in question becomes part of the community property division conversation.

It is never a good strategy to listen to “legal” advice from a spouse before or during a divorce.  You should never believe your spouse’s valuation of their business or professional practice in any conversation regarding a divorce.

If you are considering a divorce in Carlsbad or North county San Diego and a business or substantial assets are involved you should seek the advice of the Certified Family Law Specialists at Burke & Domercq, APC.  We invite you to review the recommendations of our clients and the legal industry and contact us or call 760-389-3927 to learn more or schedule an appointment.

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