What To Know About Business Valuations In California Divorces

Posted by: Gerald A. Maggio, Esq.

orange county divorce lawyers; The Maggio Law FirmProfessional business valuations is an expensive task in any marital dissolution. The spouse who manages the business quickly realizes that techniques used to value the practice have no relation with the practice’s fair market value. The spouse can then in all fairness insist that no willing buyer can be found. There can also be concerns regarding “double dipping”. This comes as the same earnings used to calculate a value in such a practice can also be utilized for calculating the support. In case the practice has a value of marital efforts, it must also be divided.

In California, a number of cases have reviewed techniques utilized by experts when valuing any professional practice. One consistent factor common between all decisions is the court will honor any technique for valuing such a practice. This includes goodwill. These will remain true as long as value is legitimately established by the evidence.

General principles

A trial court, when determining the value of any professional practice, must find out existence and the value of a number of factors. These include fixed assets like furniture, law library, cash, supplies and equipment and a number of other assets like accounts receivable, costs advanced with collectability chances, work in progress that are partially completed, but not receivable billed, and also work which is completed, but not yet billed. The practitioner’s goodwill in his business as going concern and the practitioner’s liability related to the business.

Other general principles include the business nature and enterprise history from the time of its inception. It also includes the general economic outlook and also the outlook and condition of the particular industry concerned. The stock’s book value and the business’s financial condition also plays a  role. The company’s earning and dividend paying capacity are also important.

Value standard

Unlike when assets are to be divided in kind, Californian courts can be obligated to rule on assets values and then divide them equally. Considerable debate has been allowed to find the proper standard to use in valuing marital assets. This is more fueled by the imprecise use of court terms like “going concern value” or “investment value”. The worst term is “value”.

Treasury regulations in the United States define fair market value as price in which property will communicate between a buyer and a seller. They both should not be under any compulsion to sell or to buy. Both must also have relevant knowledge about the facts.

Getting divorced in California can be complicated.  Download our free eBook, 18 Important Things to Know About California Divorce to educate yourself on the Orange County divorce process in California.  

How To Find Concealed Assets and Money During Your Divorce

Posted by: Gerald A. Maggio, Esq.

Orange County divorce attorneys; The Maggio Law FirmAs soon as the divorce proceedings start, it has been observed that many people try their best to hold back what according to them is their own property or money. There are some individuals who even possess secret bank accounts as well as other financial activities when they were married. If you feel your estranged spouse may have done the same and you desire to get a fair settlement, you need to expose such hidden accounts

When you are not ignorant about the resources and techniques used by financial and accounts professionals, you will not become a victim of your former spouse or the spouse who is concealing certain assets. Here are some of the ways to determine if your spouse may have concealed assets.

Saving accounts of your former spouse can reveal unusual withdrawals or deposits made

Abnormal withdrawals and deposits may show light to unveil a hidden asset like investments made to generate dividends. When you come across such abnormal withdrawals or deposits, you should note them down. Make sure of retaining copies of all such account statements before separating from your spouse.

Check canceled checks and account statements of your spouse

When you come across a canceled check in order to make a purchase you were ignorant about like a real estate property, it can make a significant impact on how the marital assets are split in the event of a divorce. A lot of interesting facts may get revealed when you check canceled checks and account statements. You need to ensure that you have a copy of all such financial accounts in the discovery stage of your divorce.

A courthouse can be a precious source of information if you are checking your spouse’s hidden assets

In case your spouse has taken money on a loan from a mortgage institution or a bank, the loan applications made will be filed at the said courthouse, an individual has to fill up an application form for taking loan from a Frank. Such applications will have details of all the assets owned by that individual and the estimated values of each of them. Thus, most of the times, you get a fair idea of the actual assets owned by your spouse and their worth by checking a loan application form.

You can also begin the discovery process by checking your spouse’s tax returns

A majority of the people fill their income tax returns sincerely as they are afraid of paying fines and penalties or being imprisoned otherwise. Though a spouse could be hiding his or her actual income from you, they will not try to do it while filing their returns.

Getting divorced in California can be complicated.  Download our free eBook, 18 Important Things to Know About California Divorce to educate yourself on the process.  

Documents Your Divorce Lawyer Will Need In The Divorce

Posted by: Gerald A. Maggio, Esq.

Orange County divorce attorneys; The Maggio Law FirmYour divorce attorney will need certain crucial financial documents before the divorce proceedings start and during such proceedings. Some such documents include income related documents and tax returns.  Other documents that your lawyer will need are property valuations, marital debts, documentation of assets, and related documents.

While you are getting your documents, your attorney may ask for digital or hard copies of them. However, you should make it a point to keep copies of all those documents you handed over to your divorce attorney. If you have handed them over the digital copies, save another copy either online using a cloud based service or take a backup of it. When you show these documents online through software like Google Docs, you can easily access them and you can always fetch them even if your system crashes,

It is also imperative that an organized and complete file with all the relevant documents is submitted to your attorney. It will then enable to make your negotiation process run in a smoother manner. On the other hand, when you need to approach the court, a well-organized file will help you to provide better supportive evidence in your favor.

  1. Income related documents
  • If you are employed, you need to collate pay slips from both your present and previous employers for the last one year. In case you are self-employed, you need to submit business forms or income tax returns that are associated with the income generated from your self-employment.
  • If possible, get the pay slips of your spouse for the same duration.
  • You need to also submit copies of individual or joint tax returns as applicable for both federal and state for the last 3 years.
  • When either your spouse or you are self-employed, it is also necessary to get documents relevant to your business expenses.
  • Copies of statements highlighting net worth or any other financial statements that were prepared by your spouse or you to secure bank loans.
  1. Real estate related documents
  • Present mortgage statements that you could be having on a real estate asset.
  • All documents that legally describe whether the said real estate is owned separately or together.
  • Documents related to the real estate’s initial purchase.
  • Statement of tax assessor related to a real estate.
  • In case any refinancing has been done for a real estate, you need to submit all the documents related to such a refinance.

Getting divorced in California can be complicated.  Download our free eBook, 18 Important Things to Know About California Divorce to educate yourself on the process.  

What are Preliminary Financial Disclosures in California Divorces?

Posted by: Gerald A. Maggio, Esq.

best divorce lawyers in Orange County; The Maggio LawPreliminary financial disclosures are mandatory requirement to complete for getting a California divorce. Preparation and exchange of financial disclosures is one of the initial steps in any divorce in California. If the parties fail to fulfill this step then the judge will not grant the divorce. Parties that withhold financial information willfully or are negligent while stating them might face devastating results. Complete transparency and disclosure during the preparation of the preliminary financial disclosures cannot be understated.

The reason why preliminary financial disclosure is so important

California happens to be a community property state. This means, whatever is acquired during marriage becomes community property. The term community property includes pensions, assets and liabilities. So at any point of time, if a person wants a divorce, under California law the two parties are required to resolve all the issues that were created in the course of the marital period. Examples of such issues would be custody matters, division of assets and liabilities, among others.

Invested parties are required to fill the preliminary financial disclosures which include the Schedule of Assets and Liabilities (FL-142) and the Income and Expense Declaration (FL-150). Together these two documents sum up all the property and income of the two parties.

Only upon the complete disclosure will the court have a clear understanding of the entire community estate. Often people representing themselves do not understand what the term community property means. Hence they end up excluding certain information, unknowingly, which leads to incorrect information.

Intentional withholding of preliminary financial disclosure information

One of the most serious consequences of intentional withholding of preliminary financial disclosure is the innocent party losing their share of community property. And the other consequence would be a court punishment to the guilty party for not disclosing their assets, debts, or liabilities.

Although the forms FL-150 and FL-142 might look simple and easy to understand, they are often filled with multiple complexities. Due to the legal nature of the terms and complicated definition of community property, most people often get confused as to where they have a right to share and where they don’t. What belongs to who is also a matter of concern when it comes to family heirlooms or the spouse’s 401(k), among other assets. It is to deal with these intricacies, it makes sense to hire the services or seek consultation with a divorce advocate who can help you prepare for this important step in divorce filing and proceedings.

Getting divorced in California can be complicated.  Download our free eBook, 18 Important Things to Know About California Divorce to educate yourself on the process.  

 
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