Divorce and family law
The financial half of a family law matter
When a closely held business sits in a marital estate, the case tends to turn on three questions: what the business is worth, how much of that value belongs in the estate, and what income is actually available for support. We are retained by counsel for either party, and jointly by both, at counsel’s direction.
The business as an asset of the estate
We value operating companies, professional practices and ownership interests for inclusion in the marital estate, applying the standard of value and the valuation date the jurisdiction requires. Two issues recur and are frequently decisive.
- Personal and enterprise goodwill
- Whether value is attached to the individual or to the business is treated differently across jurisdictions.
- Active and passive appreciation
- Where an interest was owned before the marriage or received by gift or inheritance, the growth in its value during the marriage may be apportioned according to whether it resulted from a spouse’s efforts or from market forces.
Assembling and testing the estate
We prepare the marital balance sheet: assets and liabilities identified, classified as marital or nonmarital, valued as of the applicable date, and tied to source documents. Where classification is contested, the tracing behind it is set out so that each item can be argued on its own rather than the whole schedule being attacked at once. Tracing of separate property through commingled accounts is described under financial forensics.
What is available for support
Reported taxable income is rarely the same figure as income available for support, particularly for a business owner. We analyze self-employment income and the taxes actually attributable to it, normalize owner compensation, and identify personal expenses paid through the business, discretionary and non-recurring items, retained earnings and distribution policy, and perquisites that function as compensation. Where the reported figures cannot be reconciled with observed spending, a lifestyle analysis addresses the gap directly.