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If you are separating and you or your partner own a business, either in one name or jointly, a decision will need to be made about what happens with the business. Most of the time, the business is kept by one party, although it can also be sold or wound up if agreed to by the parties or ordered by the court. If the business is being sold, depending on your circumstances, it is usually not necessary to have a business valuation – as the sale price of the business is usually what it is worth. If the business is being retained by you or your ex-partner, then it is important that the business is valued properly.
The Process of a Business Valuation
For the purposes of negotiating a family law settlement, parties can sometimes agree on a rough value of the business based on their knowledge. Sometimes, this is easy for very small businesses or sole traders. However, if the business is more complex, parties will often engage an accountant to provide an informal, estimated value of the business.
When there is a dispute about the value of the business or the matter is proceeding to Court, a formal family law valuation needs to be conducted. For a formal family law valuation, an expert business valuer should be used. There are certain legal requirements that a valuer must comply with, and they have to meet professional standards in their field. Our team can assist you with finding an appropriately qualified valuer to conduct a business valuation.
Except for certain exceptions, the Court will usually require a jointly engaged single expert valuer to complete a business valuation. This means you and your ex-partner need to agree on who will conduct the business valuation. Usually, we would suggest that one party selects three potential valuers and the other party chooses one of those three.
Both parties’ solicitors will usually jointly write a letter to the valuer to engage their services. In this letter, the solicitors will request a valuation and inform the valuer of any extra information they may require. Usually, the cost of a valuation is evenly shared between the parties. Sometimes, if one party will struggle to pay, the other party will cover the cost initially and be repaid out of any settlement.
The solicitors will also usually send the valuer financial statements, tax returns, trust documentation, and information received from the business’s accountant and will be required for a business valuation. If any additional information is needed, the valuer will usually contact both parties’ solicitors to request it. A valuer will look at the businesses bank accounts, contracts, any goods or property it may own such as machinery or vehicles, employees, and goodwill. Exactly what is included will vary depending on the industry and the specific business involved.
FAMILY LAW ADVICE
INFORMATION ABOUT PROPERTY AND FINANCIAL SETTLEMENTS
What needs to be done to commence a property settlement?
Can a property settlement be started before divorce?
Yes. During the period of separation, you may complete the property settlement before getting a divorce. You will need to sort out how to divide your assets and debts. This can be done via an agreement between yourself and your former spouse.
Can parties agree on a property settlement?
If you agree on arrangements, you can seek to formalise your arrangements by contacting our firm at Mornington Family Lawyers to draft your Consent Orders. If you cannot reach an agreement, you can engage our lawyers at Mornington Family Lawyers to apply to the Court for Financial Orders.
How are the assets divided into a family law settlement?
- The respective contributions made by both parties – determining assets and liabilities;
- Direct financial contributions by each party to the marriage or de facto relationship;
- Indirect financial contributions by each party such as gifts and inheritances;
- Non-financial contributions to the marriage or de facto relationship such as homemaking; and
- Future needs – the Court will take into account further matters like age, health, financial position, care of children, and ability to earn.
What is the time limit for property settlement?
You may organise your family law property settlement as soon as you want after separation. A minimum period does not apply. However, due to the emotional aspect of the matter, you may choose to allow a short period of time to elapse before properly considering property division. However, a maximum time limit does apply. An application to the Court for property settlement must be filed within 1 year of a Divorce becoming “absolute” for married couples or 2 years of separation for de facto couples. These time limits apply across all States and Territories throughout Australia.