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RHODE ISLAND DIVORCE: HOW WILL MY BUSINESS BE VALUED?

One of the most complex and contentious matters during a Rhode Island divorce is the issue of property division. If you or your spouse owns a business, this process can become even more complex. Who will retain control of the business after the divorce? How much is the business worth? To answer these questions, the courts will consider the following factors:

  1. Whether the business was started before or after the date of marriage
  2. Whether the business was a gift or inheritance
  3. Whether the business is a sole proprietorship or professional practice
  4. Whether the non-owning spouse contributed to the business' success

Depending on the court's findings, the business will either be included or excluded from your and your spouse's marital property. If deemed marital property, the courts will then be tasked with determining a business' value to ensure you both receive a fair share. Determining how much you will each receive, however, can be complicated.

While appraising and dividing assets such as homes, vehicles, and other belongings can be relatively straightforward, businesses are complex entities that can be made up of a wide range of tangible and intangible assets, including inventory, land, intellectual property, good will, equipment, and bank accounts. To accommodate for this complexity, an appraiser is usually retained to accurately assess the value of the business.

The following methods may be used to appraise your business:

  • Asset approach: The fair market value of the business is calculated by adding together the total amount of all assets, both tangible and intangible, and subtracting all company liabilities.
  • Income approach: The business is valued based on anticipated economic benefits, such as cash flow.
  • Market approach: The sales of the business are compared to those of other similar businesses to forecast the company's value.

Once reports have been created, you and your spouse will be given the opportunity to negotiate with each other towards an agreement to have one of you "buy out" the other's share of the business, either through a cash payment or property settlement. If you and your spouse are unable to come to a mutually acceptable arrangement, the courts will step in and issue a decision that determines an equitable division for you and your spouse.

Divorcing? Call TJC ESQ Today
No divorce is simple - and it is not a process you should consider going through alone. At TJC ESQ, our award-winning Providence divorce lawyers have been helping couples simplify their divorces for more than 30 years and can provide the compassionate guidance you need to get through this time as smoothly as possible.

To find out more about what our team of attorneys can do for you, call (401) 216-4414 or schedule a confidential case evaluation today to get started.

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TJC • ESQ

TJC • ESQ
76 Westminster Street, Suite 420
Providence, RI 02903

Phone: 401-400-4254
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