The Role of Monmouth County Forensic Accountants
Utilizing Expert Assistance Whenever Necessary
Forensic accountants often provide a very valuable role in a divorce case, particularly in those cases that involve owners and operators of businesses, professional practices such as medical or dental offices, and those who are self-employed.
Three Methods of Establishing Business Value
When a divorcing spouse is the owner of a business, there are two important issues a forensic accountant addresses. First is the value of the business interest. The second is the actual cash flow that should be utilized for support purposes.
For business value, there are several different types of valuations that the forensic accountants can perform. They include:
- Asset-based valuation: Evaluating the company's assets and the market value of those assets
- Comparable value: Establishing the value of a business by comparing it to similar companies that are publicly traded
- Capitalization of income: Determining the value of the income stream to the owner of the business, and the present cash value of that future income stream
At the Law Office of Steven P. Monaghan, LLC, our Monmouth County divorce attorneys have over six decades of combined experience and have good professional relationships with forensic accountants who assist us in business valuations for our divorcing clients.
Ready to learn more? Contact us today to schedule your free consultation.
Determining the Cash Flow for Divorce
Basically, if someone is operating the business, and the financial benefit being derived from the business is more than the reasonable value of the services that the person is providing, then there is an excess income stream that has value in a divorce case.
How It Works: An Outline
Here is a brief outline of the issues a forensic accountant addresses to establish a business's income stream included in a divorce case. A forensic accountant determines:
- Total financial benefit derived from the business: Includes salary, distributions, health insurance and any personal expenses paid through the business
- Reasonable value of the person's services towards the company: Done by using various studies and income guides
- Potential growth: Including industry growth and growth of the particular business
- Capitalization rate for the income: The value of the income stream to be divided as part of the overall division of the assets and liabilities
- Lifestyle of the parties: To establish the marital standard of living for purposes of the support
Want to Know the Divorce Value of Your Business? Ask Us.
If you are considering divorce and concerned how your business may be valued for divorce purposes, talk to the Monmouth County divorce attorneys at the Law Office of Steven P. Monaghan, LLC.
Call today at (732) 624-6343 to find out how we can help you!