Law

How to Make Settlement for the Family Business After a Divorce in Knoxville?

According to the Tennessee health department, the divorce rate per 1000 people in Knoxville, was 3.7 in 2018. The number puts the state at 42nd place in the list of states with the country’s highest divorces. That said, they still need a highly experienced, dedicated, and compassionate family law attorney in Knoxville, TN to make a settlement. Without an agreement, the process can be dragged out and become very expensive.

Divorce is not always an ugly business. At times couples mutually decide to go separate ways and settle for their family business as quickly as possible. Here is how you can do that without having to spend a ton of money.

Valuation of Business

Its common sense to get the business valued to reach a settlement for it. There are three methods recommended by the IRS to understand the real value of your business. They are an income-based approach, a market-based approach, and an asset-based approach. Apart from this, the salaries of the divorcing couple are evaluated, and how the business will function after the divorce.

Income-Based Approach

In this approach, the anticipated income of the business is used to value the business. This capitalization of earnings is a lengthy and complicated process as it requires analysis of factors such as revenue, expenses, and taxes. Several valuation firms and a family law attorney in Knoxville, TN, can assist you with this.

Market-Based Approach

The market-based approach is used to value the business by comparing it to similar companies. It identifies recent sales of similar businesses and makes adjustments for any differences between them.

Asset-Based Approach

This approach is centered on the value of the assets of the business. The net worth of assets is calculated after subtracting the total liabilities from the total assets. The total assets can include both tangible assets, such as building, furniture, equipment, etc., and intangible assets like goodwill. The market value of assets may vary from book value, and it is left up to you which you choose.

Business Division

Now that you know the value of your business, it time to decide how it will be divided. Not all couples participate equally in business activities as a couple. Sometimes, it is only one of them handling more than the other. So, in Knoxville, TN, the division of the business is not as simple as cutting down the middle.

Firstly, the couple has to decide if they want the business to continue running after the divorce or not. If yes, then both the parties discuss how they would want to keep the business. It may be that one partner takes complete control of the business by buying out the other partner. Or, they may decide that they would like to continue their business responsibilities as earlier, even after the divorce.

Other Factors to Be Considered

A few other things have to be considered when discussing a business split. They include your spouse’s ability to earn, financial needs and liabilities, and contribution to the acquisition of current business assets. It works best when both parties are reasonable when it comes to an understanding of the needs of the other. While Knoxville, TN, has a low divorce rate compared to other cities in the country, it still has its fair share of divorces.

Divorce is all about negotiations. If you and your spouse can be reasonable, then the process can be amicable with the support of an experienced family law attorney in Knoxville, TN. They can make the process a lot less messy than if it is taken to court. If you are a business owner and are planning to get a divorce, begin contacting an attorney immediately.

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