First, How Does the Court Determine Who Legally Owns My Business?
Dividing certain assets in a divorce can be pretty straightforward when you own a home, bank account, etc. However, dividing your assets can be much more challenging if you own a business.
For example, a Georgia judge may look at your business title, corporation filings, etc., when determining business ownership, but this is not always determinative. Additionally, your spouse’s name may appear on the business bank account, along with the titles of business equipment, lease agreements, etc.; even so, this may not indicate exclusive ownership.
If your business grew and prospered throughout your marriage, the judge can make an exemption due to your spouse’s contribution or involvement and their part in its success.
In some of these situations, your company may be subject to division, much like other marital property. Also, if either spouse started your business during the marriage, it may be considered marital property and, once again, may be subject to division.
The Georgia courts may also consider other non-monetary indicators when determining business ownership and whether your spouse contributed in different ways to its growth. For example, if one spouse ran your home and cared for your children, this allowed you more freedom to grow your business. This act could contribute to growth and indicate that your spouse is due a proportion of ownership by your “marital unit.”
So, many legally challenging questions arise, and if you are divorcing and a business is involved, a skilled business lawyer’s professional expertise, knowledge, and advice are mandatory.
In a Georgia Divorce, How Is My Business Usually Valued?
In many cases, determining the value of your business during a divorce should be a matter of “crunching the numbers.” The methods listed below are all backed by previous analysis. They are commonly recognized methodologies that create a clear and navigable path to legally deciding how much your business may be worth.
These methods are:
- The asset approach – This approach determines the value of your business based on the sum of its total assets. The tangible and intangible assets are weighed against all your business’ liabilities.
- The income approach—This approach requires that any valuation consider the future. It attempts to anticipate the economic benefits of business ownership and calculates them into a rational present-day amount.
- The market approach—This is a lot like determining the value of real estate; how does your business compare to similar companies or the sale price of comparable businesses’ ownership interests? Essentially, “comps” (or comparative companies) determine your business’s value based on the current market.
However, when any business must be valued, there are always several subjective judgments that business valuation experts must make. Due to this fact, it is rare to find two business valuation experts who determine the value of your business in the same manner.
Aside from conflicting views of how your business is valued, there may be disagreements on how the company must be divided.
Other issues may be considered, such as whether the business can continue operating if it’s forced to liquidate assets and what the tax ramifications of the sale will be for either party.
It’s a legally complex process that demands the thorough involvement of a professional business lawyer adept at accurately evaluating your business and achieving the final division in your best interests.
Your skilled, experienced business lawyer’s first primary task is to decide which valuation method works best for you. Additionally, if not expertly negotiated, any disagreement during valuation can unravel negotiations toward a fair division of assets, so professional advice and guidance are invaluable.
What Can Happen If My Spouse Disagrees With the Valuation?
This problem is common, as your spouse may inflate or disproportionately view your business’s value by not having a clear overall picture of its assets and debts.
This is a critical reason why you must have an expert valuation of your business and be able to stand by the numbers calculated when in court. By having a professional evaluate your business’s worth, you can rationally prove it and have all the necessary documentation to substantiate your findings.
It’s also not uncommon for your spouse to have their valuation done by an outside source. That can’t be stopped, but it’s always best if both valuations arrive at similar conclusions concerning the value of your business holdings; however, this doesn’t always occur.
If this situation arises, your business lawyer’s well-honed negotiating skills will prove invaluable in determining and negotiating the valuation amount with your spouse’s lawyer and their expert.
Why Is My Business Valuation So Critical In My Divorce?
If you own a business and are going through a divorce, deciding on a fair and equitable division of this usually major asset is often one of the most challenging items you and your skilled divorce lawyer must determine. The Georgia court does get involved and will insist that you and your spouse are treated fairly regarding all matters, such as spousal and child support issues and equitable distribution.
However, even in 2024, the husband is still the primary source of income in most homes and usually owns the business. Therefore, the husband’s asset valuation is usually significantly more legally and financially challenging; if they own a business, they may have varied income streams and don’t just have a W2 that clearly states their income.
So, whoever the business owner is must prove their earnings and any other financial gains or perks (such as stock holdings, etc.) that their business may provide. Therefore, a lot of money and assets may be involved, and the only meaningful way to prove your business’s total asset value is to have a professional valuation done.
Therefore, if you own a business, it’s virtually unavoidable that its value must be determined accurately during a divorce to reach any decision on equitable distribution.
Your experienced, knowledgeable, well-versed, and empathetic business lawyer will always want a total valuation of your business so that your assets and debts are abundantly clear. Your lawyer then will negotiate the best possible financial outcome for you; because you are a business owner, you shouldn’t be taken advantage of.
I Own a Business in Georgia and Divorcing; How Should I Proceed?
Almost all divorces are messy, emotional, stressful, and, at times, highly contentious situations. Suppose you’re divorcing and own a business. In that case, the detailed and accurate valuation of that asset is probably one of the primary factors determining the equitable distribution of your assets and something you want to protect.
Therefore, under these circumstances, you must have a lawyer knowledgeable about managing these issues and capable of helping you accurately evaluate your business with the skill and in-depth financial knowledge it deserves.
The skilled, passionate, and detail-oriented business lawyers at Oliver Hughes LLC have successfully navigated the equitable distribution process for myriad business owners. They are well-equipped to manage the complex legal issues that usually arise.
Call them today at 770-230-1447 and get the professional expertise and rational, passionate legal representation you need to manage this extremely critical part of your divorce.
