“‘D-I-V-O-R-C-E’ (Apologies To Tammy Wynette)”
Posted on 09.08.17
Harold G. Martin, Jr., Keiter Valuation and Forensic Services Partner, shared his insights on business valuation in divorce in the article, “'D-I-V-O-R-C-E' (Apologies To Tammy Wynette)”, featured in VSCPA's Disclosures magazine.
Excerpt from Harold Martin’s VSCPA Disclosures magazine article:
“Unfortunately, in more than 40 percent of marriages, country songs such as Tammy Wynette's “D-I-V-O-R-C-E” present a real-life storyline. When these matters involve ownership by one of the parties in a closely held business, CPAs may assist as consultants or serve as expert witnesses in litigation to quanitfy the value of the propertied spouse's interest. This article presents an overview of the applicable Virginia statutes, case law and professional standards, as well as the key concepts with which a CPA should be familiar when valuing a business and classifying property for equitable distribution in divorce.
- While the Code of Virginia defines “equitable distribution” of assets in divorce, it does not specifically define a standard for determining a spouse's interest in a closely held business.
- Case law provides a standard of value for determining a spouse's interest, but it is inconsistent. The landmark case often cited as the basis for standard of value for divorce in Virginia is Bosserman v. Bosserman.
- The three recognized valuation approaces (income, market and asset) should be considered for purposes of valuing the properties spouse's ownership interest in divorce, though there are nuances to each.