The Value of Your Business

business-valuationThe standard of value in divorce cases are State specific. In a recent case decided by the Utah Court of Appeals, Elman v. Elman, 45 P.3d 176, the Court awarded the wife a share of the husband’s corporate business interests because of “sweat equity” in allowing the husband to work 60-70 hours per week to make the business grow. The Court may award up to 50% of the value of the business to the non-principal spouse.

Fair Market Value

A problem arises when the court attempts to segregate good will from the fair market value of the business. In the Utah Supreme Court case, Sorensen v. Sorensen, 839 P.2d 774, the Court ruled that the reputation of a professional is solely personal. The only assets available for a professional business are the accounts receivable and hard assets less the debts. Alimony is the only way to share the fruits of the business.

However, in a traditional business, good will can be valued and divided as part of the business assets in a divorce.

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