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Valuing a business during divorce negotiations

Some entrepreneurs in Alaska may believe that the rules governing the division of marital property do not apply to business interests, but they would be in for a shock if they were to divorce. Businesses are assets, and they will be treated in the same way as real estate, investments or artwork during a divorce. However, the length of time that a business has been in operation could have an impact on how it will be treated during divorce negotiations.

If the business was established after the couple in question married, it will be considered a marital asset and its entire value will be subject to property division. However, if the business was already operating before the couple walked down the aisle, only the appreciation that the business has enjoyed during the marriage will be subject to division.

While dividing investment portfolios or similar assets may be relatively simple, untangling business ownership can be quite complex. Ordering a business sold is a simple way to resolve these issues, but judges are often reluctant to do this as it could make the future payment of spousal or child support uncertain. A common solution to this problem is allowing one spouse to keep the business while the other is compensated with either a cash payment or a greater share of other marital assets.

Experienced family law attorneys will likely pay close attention to how businesses have fared in the months prior to a divorce. Entrepreneurs have been known to allow businesses to decline in value in order to secure a more advantageous divorce settlement. Attorneys who suspect such behavior may call upon experts such as accountants and auditors to closely review business records to identify dubious transactions and questionable occurrences.

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