A Tangled Web: Problems Arise when Appellate Court Awards ‘Equalization Payment’

Posted on 12.31.14

It happens, likely more often than we know.  A couple gets a divorce and the judge awards the non-business owner an “equalization payment.”  In many cases, that is the end of the story. However, in some cases, it is just the beginning.  It can happen that the equalization award is unrealistic for one or both of two basic

reasons. The first is that the business owner’s business interests are illiquid, making it difficult if not impossible for the business owner to pay the equalization payment, at least in the short-term (which is often what is ordered by the court). Secondly, the court may sometimes assign values to the business interests that are not in line with the fair market value of the business interests.

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The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.

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