Divorce is already a complicated, messy process. Throw in a health crisis, a wavering economy, and total financial future uncertainty, and the divorce becomes an apocalypse in and of itself. While we are still dealing with these challenges, it is hard to identify the actual financial fallout of all that has ensued. For couples who aren’t in the midst of a high-asset divorce, how it may be affected by the current situation is likely not even a thought. However, there is a very real issue of how to properly value certain assets and settle a divorce equitably.
Closely held businesses are almost impossible to be properly valued at the current point in time. Why? Because no one knows when they will again be allowed to open and operate at full capacity and potential. If a divorcing couple own a restaurant, it is likely that the income it is currently producing, if any, is less than half of normal revenue. They do not know when, or if, income levels will ever arise to the point they were at when the pandemic began. The same scenario applies to any profession currently operating under restrictions, or spouses who are currently laid off from high paying positions. So the question remains, how do we currently value assets in income in divorce negotiations?
The only certain answer anyone will have for any of these questions until pandemic restrictions are lifted and business as usual returns is that we don’t know. However, an experienced high-asset divorce attorney should have associates and connections that, combined and working together, should be able to provide a reasonable expectation of future value. Possible sources of information may be accountants or economic experts, possibly even wealth advisors.
Complex divorces should always be handled by a skilled attorney. In the midst of the current pandemic, this is more true than ever. Settling a divorce with undervalued assets can prove financially disastrous in the future. Make sure you have exercised every avenue of valuation before signing on the dotted line.