Valuation in the Divorce Setting
Divorce valuations are completely state-specific and are dependent on the specific facts and circumstances of each case. This chapter presents some general but important concepts and also references certain state-specific cases where an important issue was addressed. For additional information on some of these issues, see Chapter 19, Valuation Issues in Small Businesses, and Chapter 20, Valuation Issues in Professional Practices.
STANDARDS OF VALUE IN DIVORCE
It is incumbent on the analyst to know what standard of value is appropriate in the valuation of a business or business interest in a divorce. Since this may vary from state to state and from jurisdiction to jurisdiction, the analyst should be aware of the terminology used in the jurisdiction and how that terminology is defined within that jurisdiction. Most often, case law within the jurisdiction is the appropriate source for defining the standard of value. Furthermore, the definitions of the standard of value for divorce may differ from the traditional definitions for other areas of valuation, which are discussed in Chapters 1 and 2.
Value or Fair Value
Some state marital dissolution statutes refer to “value” or “fair value.” Fair value is a statutorily or judicially defined standard of value. Historically, fair value has been used primarily in litigation matters involving a marital dissolution or with dissenting minority interest shareholders. When valuing a business using the ...