In each “Meet the Team” segment, we highlight a different professional on our Family Law team. This segment we highlight Karolina Calhoun, CPA/ABV/CFF. Karolina is a Vice President here at Mercer and is active in family law litigation and corporate valuation.
In this article, we’ll be presenting a broad overview of the income approach. The final approach, the asset-based approach, will discussed in a future article. While each approach should be considered, the approach(es) ultimately relied upon will depend on the unique facts and circumstances of each situation.
In each “Meet the Team” segment, we highlight a different professional on our Family Law team. This segment we highlight Scott Womack, ASA, MAFF. Scott is a Senior Vice President here at Mercer and is active in family law litigation and corporate valuation. Scott also leads our Auto Dealership Industry team.
Knowing how to navigate key areas of Form 1040 can be quite useful in divorce proceedings. Information within the tax return can provide support for marital assets and liabilities, determination of spousal and child support, and potential further analyses. In this post we discuss why a Form 1040 could be important in divorce proceedings and some key areas of focus.
This article presents a broad overview of the market approach, which is one of the three (the other two being asset and income) approaches utilized in business valuations.
The discount rate is the key factor in business valuation that converts future dollars into present value as of the valuation date. In this article, we examine the various components of a discount rate. Then, we relate the discount rate to rates of return of other investments that should provide a commonsense road map for what is reasonable and what is not.
Personal goodwill was an issue in several of our recent litigated divorce engagements. It is more prevalent in certain industries than others and varies from matter to matter. However, although there are several accepted methodologies to determine personal goodwill, there is not a textbook that discusses where it exists and where it doesn’t. Before any attempts to measure and quantify it, an important question to ask is “Does it exist?” Often with ambiguous concepts like personal goodwill, the adage “you know it when you see it” is most appropriate. In this article, we examine personal and enterprise goodwill using a specific fact pattern unique to the auto dealership industry. Beyond this illustrative example, the analyses can be applied in other industries, but must be considered carefully for the unique facts and circumstances of each matter.
The valuation date represents the point in time at which the business, or business interest(s), is being valued. Understanding the valuation date of an asset valuation, such as a privately held business, for marital dissolution is an important consideration, especially for matters which have extended over a lengthy time and those that may be impacted by significant global events such as COVID-19. An accurate and timely valuation should consider current conditions and future expectations.
The valuation of stock options is a complex issue that divorcing parties may face during the determination and division of property. Designed to both reward performance and retain employees, these benefits can be difficult to value, particularly at a random moment for the purpose of marital dissolution.
AICPA Issues New Forensic Services Standards
Most family law cases settle at mediation or prior to trial. For example, Tennessee requires that parties must attempt to settle their cases at mediation prior to granting a trial date. Considering both of these facts, when should a family law attorney involve a financial expert in divorce mediations?
In our family law practice, we serve as valuation and financial forensic expert witnesses. There is typically another valuation expert on “the other side.” In several recent engagements, the following topics, posed as questions here, were raised as points of contention. We present them here to help the reader, whether you are a family law attorney or a party to a divorce, understand certain valuation-related issues that may be raised in your matter.
What is a client, attorney, or judge to think when significantly different valuation conclusions are present? The answer to the reasonableness of one or both conclusions lies in the reasonableness of the appraisers’ assumptions. However, valuation is more than “proving” that each and every assumption is reasonable. Valuation also involves proving the overall reasonableness of an appraiser’s conclusion.
On May 8-10, 2019, Mercer Capital attended the 2019 AAML/BVR National Divorce Conference in Las Vegas. This was the first biannual National Divorce Conference on cutting edge tax, valuation, and financial issues co-sponsored by the American Academy of Matrimonial Lawyers and Business Valuation Resources, LLC. We have chosen four sessions that we thought would be of interest.
What is a collaborative divorce and how do they work? This article provides an overview of the model and some advantages of the process.
A lifestyle analysis is an analysis of each party’s sources of income and expenses. It is used in the divorce process to demonstrate the standard of living during the marriage and to determine the living expenses and spending habits of each spouse. This article explores the various aspects including factors considered and sources of financial information used in the analysis. Additionally, we outline the process of building the analysis.
By now, many are familiar with the changes from the Tax Cuts and Jobs Act (TCJA), however, specific changes related to family law and alimony deductibility went into effect in 2019. This article reviews those that went into effect January 1, 2019, and provides a recap of the 2018 changes.
How does a business owner evaluate their business? And how can advisers or formal business valuations assist owners examining their businesses? There are at least six ways and they are important, regardless of the size of the business. All six of these should be contemplated within a formal business valuation.
Under Tennessee law, marital property is subject to property division and separate property is excluded from property division in a divorce. The underlying factor in this distinction is whether the increase in value between the date of marriage and the date of divorce resulted from efforts by a spouse, known as active appreciation, or from external (economic, market, industry) forces, known as passive appreciation. While these concepts seem simple, the classifications are only part of the story.
For years, cases such as Bertuca and Barnes governed the landscape on the issue of marketability in the valuation of marital assets in Tennessee family law cases. So what has changed now? In this post, we discuss recent changes by Tennessee legislature that amends the Tennessee Code Annotated Title 36, Chapter 4.
Valuation of a business can be a complex process requiring certified business valuation and forensic accounting professionals. Valuations of a closely held business in the context of a divorce are typically multifaceted and may require forensic investigative scrutiny for irregularities in the financials that may insinuate dissipation of business/marital property. Business valuations are a vital element of the marital dissolution process as the value of a business, or interests in a business, impact the marital balance sheet and the subsequent allocation/distribution of marital assets.
Most family law attorneys do not have a background in finance or accounting, yet are often confronted with complex financial issues in divorce matters. The services of an experienced financial expert can be vital to you and your client in such matters.
High dollar, contested divorce litigation engagements often involve complex financial issues. In turn, those financial issues usually include business valuations and voluminous amounts of documents and financial information. How does an attorney or business appraiser determine what is crucial to the case and what is trivial or secondary information? One such piece of financial information that varies wildly in its interpretation and importance to the case is a personal financial statement.
Most professionals have seen countless reports of the 2017 Tax Cuts & Jobs Act (TCJA) on national news and been bombarded with requests to discuss the impact and various changes in the new law. For the family law community, obvious takeaways are the change in the deductibility, or lack thereof, in alimony payments after 2018, elimination of personal exemptions, and expanded use of 529 plans to include secondary and lower-level education expenses. Can a provision in the TCJA actually provide some insight into the presence of personal goodwill?