so there’s two parts to determining a
distribution of a business asset the
first part is you have to figure out
actually the value of the business and
the second part is you need to figure
out what is the
percentage that your client will
actually achieve or the other client
will pay out in terms of that percentage
so in New York it’s pretty rare to have
a 50/50 split of a business business
asset so we should be clear about that
the range is anywhere from I would say
20% to probably
40% sometimes someone Works in a
business who is the non-titled spouse to
the business so they may be actually a
big factor in the business and then
maybe they reach something like 45% and
in that rare case 50% but you’re usually
not talking about a 50/50 split of a
business asset and you’re not talking
about getting the business asset usually
you’re talking about a payout a lumpsum
payout whether it be over time perhaps
with interest or whether it be a lumpsum
payout that you will receive at the time
that you settle your case or after a
trial of the matter now it’s complicated
you may need a forensic accounting firm
or an accounting firm who can value the
business that’s something that needs to
happen and there will be various
documents that have to be produced
whether you own the business or the
other person is actually looking to get
get their share of the business there
will be a lot of production in terms of
documentation I mentioned earlier
General ledgers for example you will be
actually asked to produce the general
ledgers probably in Native format so
that it will be much easier for the
accounting firm to go through it and you
will be asked to produce loan documents
financial statements credit card
statements bank accounts um you may be
actually asked to have Partners come in
and have depositions these are all
things that could happen in order to
Value the business what the valuator is
trying to do is to figure out what the
value would be if two um willing parties
were actually buying buying and selling
the business and they’re looking at
normalizing certain things when they’re
doing this so they are normalizing for
example the expenses of the business you
may have a situation where people are
paying personal expenses at of the
business well that wouldn’t necessarily
be a normal expense of a business and so
they will be deducting those actual
expenses that are being paid out of the
business you may be paying rents to
someone who is a family member who may
own the property on which the business
is actually being conducted the rents
may be higher than what is normal and so
you may be looking at normalizing the
rents you may normalize the salaries and
the compensation of both the owner and
some of the other employees so there may
be a whole host of of things that are
done including discount rates that are
taken including figuring out what a cap
rate is so there is a whole host of
things that are done to Value the
business now you have the second part
what was the other spouses the
non-titled spouse to the business what
was their
contribution it can be direct or
indirect so did they help raise the
family while someone was out building
the business that’s important did they
go to the dry cleaners cook the meals
you know pick up the kids do all of that
so that someone actually could be
working in their business and traveling
for business and taking out clients for
business did they socialize with people
in the business and clients that would
be important to the business these are
all things that we look at in terms of
contribution so did they actually work
in the business well that’s a direct
contribution and so the percentage that
you may be entitled to because of a
direct contribution will get higher than
for indirect contributions but they’re
all contributions and so you want to
figure out what was the assistance level
of the non-titled spouse in this
business and then come to some agreement
on percentage in New York it’s very rare
for the non-titled spouse to actually
have an ownership interest in the
business after the divorce it it’s very
rare because it’s really you want to
separate the party ities as much as you
can and having them be in the same
business particularly when it may be the
non-titled spouse who didn’t work in the
business and really doesn’t understand
how the business works and can’t add in
a meaningful way to the business it
would be best to separate out the
spouses therefore we have to figure out
what is the percentage of the value that
the non-titled spouse will receive at
the end of a divorce in New York it’s
usually not 50% I’m going to tell you
that I know that’s disappointing to some
people
but unless you’re really involved in the
business per se on a day-to-day basis or
the marriage is very long or this some
other reason it’s likely not to be 50%
it could be anywhere from 20% to 40%
sometimes if you’ve been involved in the
business to some degree maybe it’s 45%
of the marriage is long but essentially
for the non-titled spouse there’s going
to be a payout and the other spouse the
spouse who owns the business is going to
receive the business so that they can
carry on
