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Kane County divorce attorneyIn Illinois, parties to a divorce are often required to complete a financial affidavit. A financial affidavit is a legal document used to declare the income, expenses, assets and property, and outstanding debts of each spouse. Parties to a divorce have a basic duty to make full and transparent financial disclosures.

Unfortunately, not everyone plays by the rules. If you believe your former partner is hiding assets, your rights are being violated. Fortunately, there are tools you can use to help uncover property and assets that are being improperly concealed by your spouse.

How Do I Know if My Spouse is Hiding Assets?

Divorce cases involving hidden assets are notoriously complex. The spouse who is playing by the rules faces a significant challenge: How do you find the assets that your spouse is hiding? After all, if your spouse is trying to hide money or property to keep it out of the divorce, they are not going to make it easy to locate.

Four Mistakes to Avoid During Your Business Valuation for DivorceIt is vital to conduct an accurate valuation of your business during your divorce. The value that you and your spouse agree on will determine how much it will cost you in other marital assets to have sole possession of your business following a divorce. If you overvalue your business, you may give up too many assets to keep your business intact. While undervaluing your business could be advantageous, you risk the divorce court rejecting your agreement if it objects to your valuation methods. There are several ways that someone can make a mistake in the business valuation process that will skew the value of the business:

  1. Using the Wrong Valuation Method: There are generally three methods of valuing a business: income-based, asset-based, and market value. The accuracy of each method may depend on the type of business you are valuing. For instance, the market value approach is not considered to be an accurate way to value a privately held company if you are comparing it to publicly traded companies.
  2. Overlooking Assets and Liabilities: The asset-based valuation approach should include all of your business’ assets and liabilities. Some assets and liabilities can be easy to overlook because they are not tangible properties or part of your regular balance sheet. For instance, your business may have long-term debts that are not listed in your budget or goodwill value that only exists because of your reputation.
  3. Not Considering Risk in Growth Projections: Another part of the value of your business is how much it is expected to grow in size and profits. Your business plan may project a certain amount of growth in the coming years but also considers risks that may hamper growth. A business valuation that does not consider risk may overvalue your business by projecting unrealistic growth.
  4. Giving Too Much Weight to Outlier Events: Situations arise that may change your business’s value in ways that you do not expect to continue. We are currently going through a big outlier event because of the coronavirus outbreak. Many businesses have been forced to close, while others are seeing an increased demand for their products. Once the economy fully reopens and consumers return to their normal spending habits, your business’s value may also revert back to normal.

Contact a St. Charles, Illinois, Divorce Lawyer

Valuing your business is not something you should attempt to do on your own because of the many ways that you can make mistakes. A Kane County divorce lawyer at Goostree Law Group works with professionals who regularly assess the value of businesses for the purpose of divorce. To schedule a free consultation, call 630-584-4800.

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The Financial and Personal Effect of Divorce on Your BusinessKeeping your business separate from your marriage is difficult to accomplish when you are getting a divorce. There are many ways that your business can become part of your marital property, whether you:

  • Started the business during your marriage
  • Grew the business’s value during your marriage
  • Invested marital money into your business
  • Mingled your business properties with your marital properties

For many small business owners, their spouses may be involved in the business as either an employee or part owner. A divorce can affect your business’s finances and your working relationship with employees and partners. However, you can minimize any negative impact on your business with the help of a divorce attorney.

Financial Effect

When your business is marital property, it means that your spouse can claim an equitable share in the business. If you already co-own the business with a partner, losing a portion of your ownership in the business could change your power dynamic with your business partner. Having a new co-owner could also be disruptive to your business, whether it is your former spouse or someone else they sold their ownership stake to.

Posted on in High Asset Divorce

Three Business Valuation Methods for Your DivorceIf you are a business owner who is getting divorced, you will need to conduct a professional valuation of your business. A business is a marital property if you started or purchased it during your marriage. Even if you have owned the business since before you were married, it may have become marital property because you invested personal assets into it. Business valuations are complicated because there are multiple approaches to valuation and several aspects of a business that you must consider when calculating its value. There are three general approaches to business valuation, each with their own strengths:

  1. Income-Based Approach: The most popular method of business valuation, this approach values a business based on the earnings that it is able to generate. The business appraiser looks at the business’s past earnings and projects the future earnings, based on trends and accounting for risks.
  2. Asset-Based Approach: The appraiser bases the value of the business on the value of its assets. The appraiser comes to a total by either subtracting the value of the business’s liabilities from the value of its assets or estimating the amount of money the business would receive if it liquidated all of its assets. This approach requires appraising the value of tangible and intangible assets.
  3. Market Value Approach: Taking an approach that is similar to real estate, the appraiser looks at similar businesses that were recently sold to see what those owners received in their sales. This method relies on being able to find multiple examples of businesses that are strongly comparable to the business being valued.

Challenges for Small Business Owners

The business valuation process may be more complex if you are the owner of a small business. Appraisers must consider the goodwill value of small businesses because some of the business’s value is based on the owner’s reputation and would be lost if the business was sold. The owner may use their personal assets for their business, and the appraiser needs to separate the personal assets from the business assets. For the market value approach, it is more difficult to find sales involving comparable small businesses.

Contact a St. Charles, Illinois, Divorce Lawyer

Determining the value of your business may require a mixture of valuation approaches, depending on the type of business you own. Fortunately, you do not need to worry about searching for an appraiser. A Kane County divorce attorney at Goostree Law Group regularly works with business appraisers and can recommend one for your case. To schedule a free consultation, call 630-584-4800.

Costly Mistakes to Avoid in a High Asset DivorceA couple in a high asset divorce has more at stake in the division of property – and more to lose if they make a mistake. A poorly conceived divorce agreement could cost you a small fortune in lost or squandered assets. Once the agreement is approved, you will not get a do-over unless you can prove that your spouse intentionally deceived you during your divorce or you signed the agreement under duress. To avoid having remorse over your high asset divorce, you should do your best to get your agreement right the first time.

Dig Deep

The main way that a high asset divorce is different from other divorces is the number and variety of marital properties. You need to thoroughly investigate your spouse’s finances to see whether there are hidden assets, such as:

  • Undisclosed bank accounts
  • Marital assets within a business
  • Business assets purchased with marital money
  • Secret retirement accounts
  • Secret collections of luxury items
  • Undisclosed real estate
  • Marital assets being loaned to a friend

It is fraudulent for your spouse to hide marital assets if your spouse is actively trying to deceive you. Your spouse might not be at fault if you overlook assets that a reasonable investigation would have discovered.

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