How does business ownership affect a divorce in North County San Diego? Many operating agreements attempt to establish an unreasonably low value for the ownership interest. For example, a physician’s practice may establish the ownership value of each doctor’s interest in the practice at $35,000. In many cases, these clauses are shown to spouses in an attempt to intimidate them or convince them that the professional practice or business ownership interest has no substantial value.
Nothing could be further from the truth. California protects the “marital interest” in all business interests associated with divorcing spouses such as ownership of an LLC or corporation, or a professional practice. The key is to establish a fair and independent valuation of the spouse’s business interest.
There are several strategies to establish a credible valuation, and the best options vary depending upon the nature of the business or practice. In some cases, valuation is established by multiplying annual revenues by an industry-standard “multiplier” in order to establish a fair valuation. In other examples, experts must review the value of a company or corporate interest if that ownership was offered for sale in the local marketplace.
How does business ownership affect a divorce in North County San Diego? The experienced divorce attorneys at Burke & Domercq have extensive experience in cases which involve business ownership or a professional practice. We work to protect our client’s interests, and to establish a fair and accurate valuation. Once valuation has been established, the asset can be handled as any other marital asset of the couple.
It may be necessary to “offset” the non-ownership interest of the other spouse in order to preserve an operational business model. These complex negotiations must take many aspects of valuation, appreciation, as well as the impact of taxation in order to reach a fair settlement.
Our experienced and seasoned divorce attorneys work to protect the viability of the associated business or professional practice while working to establish a valuation that accurately reflects and protects our client’s interests.