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Upon pending dissolution of marriage it is often determined that there needs to be a Divorce Valuation on one or more properties, businesses, investments, and ancillary items.
A Divorce Valuation is used to value a family owed business or real property. Most often the wife has very little knowledge of the business that is usually operated mostly, if not entirely, by the husband. In these situations, it is sometimes best for both parties to get a Divorce Valuation for the business, and average the two values, for one compromised value. Either of the divorcing parties may have invested in a Limited Partnership, Limited Liability Company (LLC), Promissory Note, or Closely Held Stock. Therefore a Divorce Valuation needs to be completed by an independent expert for each of these investments. In many cases, one of the divorced parties, usually the husband, owns one or more of these non-liquid investments via their company sponsored 401k plan, or in a self-directed IRA. In this situation a 401k Plan Appraisal, or 401k Plan Valuation, is needed as part of the Divorce Appraisal, or Divorce Valuation.
For relatively small businesses and investments, it usually suffices to follow the valuation guidelines set forth in IRS Revenue Ruling 59-60. For businesses and investments of substantial value, it may be appropriate to follow the guidelines set forth in Financial Accounting Standards, FAS 157.