Business owners in Washington state face a complex financial situation should they decide to divorce. Issues surrounding valuation, asset liquidity, and fair compensation for a spouse’s labor frequently arise. These thorny financial questions usually call for the services of a forensic accountant.
What a forensic accountant can do
When you hear that a forensic accountant is involved in a divorce, you may associate that with someone trying to hide assets. However, the investigative skills of a forensic accountant fulfill another purpose, which is to establish the current financial status of the business and the splitting spouses’ share of the value.
Forensic accounting services include:
-Calculating a fair market salary for an owner’s labor
-Figuring out which assets are personal or business
-Providing expert testimony in court
-Subtracting pre-marriage asset values from the current total
-Establishing the business’s value so that the divorce terms can be negotiated
Divorce could threaten a business’s future
Although a business may have a high value on paper, that value is not necessarily liquid. The funds necessary to settle a divorce may not be on hand, which could force a total liquidation of the business.
Reasons a spouse may deserve a share of a business’s value:
-The spouse helped to found the business and owns a share
-The spouse worked at the business as an employee
-The spouse gave up other opportunities to support the business owner’s success
Searching for solutions
You may need to go through several rounds of negotiations to find a workable solution that settles the divorce and allows the business to continue, if possible. Solutions may present themselves in the form of exchanging personal assets for business assets or a payment plan instead of an immediate buyout.