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Family Law calendar    Aug 22, 2016

Family Law: Meeting in the Middle on a Business Valuation may be best for everyone

The biggest stumbling blocks in family law property settlements is not deciding which party gets the business or how it should be divided, but who should value the business and what the business is worth.

In our experience, the biggest stumbling blocks in family law property settlements is not deciding which party gets the business or how the business should be divided. The biggest stumbling blocks are deciding who should value the business and, by extension, what the business is actually worth.

 You strategy for approaching a property settlement will depend on a number of things, such as the size of the asset pool, the type of business and the financial circumstances of the business.

 We understand that your small business is your baby. However, consider the following situation: the parties to a family law property settlement cannot come to an agreement about a valuer for one party’s business. Your lawyers email back and forth, each calling their respective clients multiple times to discuss the matter. Three months pass before a valuer is chosen, by which time the asset pool has been significantly de-valued by the increased legal fees both parties will have to pay.

 There are a number of reasons why this situation may arise:

  • One party may be trying to frustrate the process
  • The non-business owner may have legitimate concerns about the independence of any valuer chosen by the business owner
  • The business owner does not want to lose their business and is seeking a valuer who will provide a favorable valuation to help his case.

 In some instances, the choice of valuer will be pivotal for the outcome of the settlement, especially where the parties’ offers for the division of property are vastly diverging. However, there are many instances where a pragmatic negotiation strategy actually requires and is benefitted by compromise. Meeting in the middle may feel like a loss after all the work you have put into your business baby. However, compromise is often the best way to save money in your property settlement and ultimately keep the business intact in the division of assets.

 If you have a family law matter, concerns about your family business or questions about family law and separation in NSW and want to find out more please do not hesitate to contact us on 9688 6023 or email us at info@franklegal.com.au.

 Can You Use Family Law To Avoid Tax? Download The InfoSheet Here

This article is provided to the reader for general information. It is not legal advice. It was written by Andrea Spencer & Emily Graham and edited by James Frank.

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