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Valuing Businesses and Investments in High Net Worth Divorces

By Aug 31, 2023 Posted in Divorce

One of the most difficult elements of many divorces is determining how assets should be divided among the spouses. Iowa is an “equitable distribution” state. This means that the court will try to divide the marital assets between the spouses fairly and equitably. This contrasts “community property” states, where marital property is divided on a 50/50 basis or as closely as possible. There are advantages and disadvantages to both approaches. Still, you should know that one spouse may receive more than half of the marital property in an equitable distribution state such as Iowa. 

This can be a significant issue in divorces where one or both spouses have a high net worth. Conducting an accurate valuation is critical for ensuring that the property division is fair. If you have significant assets, and are considering a divorce, a divorce lawyer with experience handling high-asset divorces can provide invaluable guidance. 

Business Valuation

It is not easy to assign a value to a business. One of the first things you need to do is calculate the total value of your business assets versus the total outstanding business liabilities. 

  • Business assets can be both tangible and intangible. Tangible assets include real estate, office equipment, and cash accounts. Intangible assets include intellectual property, brand reputation, and goodwill with clients or customers. 
  • Liabilities include loans, other debts, payroll, and accounts payable. 

You can determine the business’s starting value by subtracting the total liabilities from the total assets. However, you must also consider other factors, such as the business’s income and market value versus its book value. Ultimately, arriving at a fair valuation of your business will likely require the services of an expert. 

Investment Valuation

Determining the value of your investments can be similarly challenging when determining what is fair in a divorce. The nature of the investment, the tax implications, and the timing are all important factors to consider. For example: 

  • Different retirement accounts can have very different values due to how withdrawals are taxed. In short, a Roth IRA may be more valuable than a traditional retirement account because withdrawals will not be taxed (assuming they are made after retirement). 
  • Taxable investment accounts raise whether you should sell and split the proceeds or the shares. Selling the shares will result in a tax liability, while the other raises questions about which shares will be more valuable now versus in the long term. 
  • Many high-net-worth couples have substantial real estate portfolios. Similar to investment accounts, there are questions of tax liability and current versus future valuation. 

Invest in your future by getting the help you need. An experienced divorce attorney can walk you through these issues and help you make an informed decision. 

Contact Simpson Legal Group Today

If you have extensive assets and are facing a divorce, an experienced divorce lawyer from Simpson Legal Group can help you reach a fair and equitable property settlement. Call us today at 712-256-9899 or contact us online to schedule a consultation. 

Contact Us

50 Northcrest Drive, Council Bluffs, Iowa 51503
Phone: 712.256.9899

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