According to statistics from the Pennsylvania Department of Health, in 2019, there were 32,985 divorces and annulments across the state. Dividing assets in a Pennsylvania divorce is one of the most common issues that must be resolved by both parties. However, marital property division can be even more complicated and fiercely contested when a family business is involved.
If you are considering filing for a divorce and trying to understand how your business will be valued and divided, it’s important that you consult with a knowledgeable Pennsylvania divorce attorney for detailed guidance. Our attorneys at Iwanyshyn & Associates are committed to providing comprehensive and experienced legal guidance on matters related to business valuation and division of assets. As your legal counsel, we will educate you on all of your available legal options, address any concerns you may have, and help you navigate key decisions in all of your divorce proceedings.
Iwanyshyn & Associates is also proud to serve clients throughout Allison Park, Pennsylvania, and the surrounding communities including Allegheny, Cranberry Township, Butler, Pittsburgh, and Beaver.
Business valuation can be described as the process of estimating the economic value of a company or business. This involves adding up the value of every business asset, including all property, equipment, and inventory before subtracting any debts, taxes, or liabilities.
During a Pennsylvania divorce, the valuation of a business can be determined using any of the following approaches:
Business valuation through the income approach involves using the current value and future potential earnings of the company. The business value can be derived using present and potential earnings. This business valuation can be obtained using the income statement on the business's tax return.
Furthermore, business valuation through the market approach involves using industry standards to assign value to the business. The value of the business can be determined by looking at other businesses in the market or industry that are in similar situations.
Valuing a business through the asset approach involves using the company's assets to determine the value of the business. Using this approach, both tangible assets (property, cash, investments, inventory, vehicles, and equipment) and intangible assets (patents, trade secrets, intellectual property, and copyrights) will be considered when determining the value of the company.
Pennsylvania is considered an "equitable distribution" state. Under Pennsylvania law (Pa. C.S.A. - Title 23 - Chapter 35 § 3502.), marital property (assets and debts acquired by both spouses during their marriage) should be divided "equitably and fairly" in a divorce. The following factors may be considered to ensure equitable distribution of a family business during divorce proceedings:
Was the business started prior to the marriage?
Who invested more time and resources into the business?
How will the sale or transfer of the business be taxed?
Unfortunately, the valuation of intangible assets, such as intellectual property, trade secrets, and patents can present certain challenges during business valuation or during the division of the business. Some possible options to resolve potential issues when splitting the business value include:
Buying out your spouse
Selling the business
Dividing the business (co-owners)
Determining the economic value of a business can be very difficult and oftentimes complex. That’s why it is so crucial to have a highly skilled and knowledgeable attorney who understands how to value a business, as well as the forensic accounting aspect, including an investigation of tax preparation, tax returns, determining cash flow, and uncovering any hidden assets or income streams.
The valuation and division of a business in a divorce can be complicated, especially when the company is a startup or a new business with a promising future. When a family business or business assets are part of the marital property, it’s likely that you will need experienced legal guidance and representation from a knowledgeable Pennsylvania divorce attorney who can protect your rights and help you overcome any obstacles that arise.
At Iwanyshyn & Associates, our attorneys have devoted their entire careers to offering experienced legal services to clients facing complex divorce issues related to the valuation and division of a business. Our forensic accountant will use their investigative skills and auditing abilities to evaluate and determine the true worth of your family business to ensure a fair and equitable division.
No matter what your circumstances may be, our experienced family law attorneys will review every aspect of your case, evaluate the unique details of your situation, and go over all of the legal options that you have at your disposal. From there, our team will craft a feasible solution that works best for both you and your family.
Our top priority will be to work diligently to address your unique needs and concerns while resolving any divorce issues that arise between all parties involved so that you can focus on what matters most — moving forward with your life. So if you or someone you know is considering a divorce and needs assistance with the valuation and division of a business, don’t face these challenges on your own. Reach out to our firm today for help.
If you are considering filing for a divorce and trying to understand business valuation and division, call Iwanyshyn & Associates today for a one-on-one case assessment. Our experienced family law attorneys can offer you the comprehensive legal guidance and advocacy you need to navigate the complexities of your unique situation. If you live in Allison Park, Allegheny, Cranberry Township, Butler, Pittsburgh, or Beaver, Pennsylvania, don’t wait. Contact our firm today to get the legal guidance and support you need.