When a couple come to divide their property following a separation, the first thing they must do is work out exactly who owns what, and the value of their assets.

But it’s not an easy step to take. Valuing their assets, for instance, can create major problems.

With any real estate they may own, it’s not so difficult. Market appraisals are readily available from real estate agents at no cost and these people can give a good indication of the likely value of the home. If the home is going to be sold as part of the settlement, the market determines the value of the real estate in a fair way.

But if one party wants to buy out the other party’s interest in real estate, determining a precise value for the real estate becomes crucial. If there is disagreement, it is often necessary for the parties to appoint  licensed valuers to undertake an official valuation of the real estate. The best way to do this is for the parties to jointly appoint one single expert valuer; pay the cost of the valuation jointly beforehand, and agree to be bound by the result.

What about the valuation of a business? This is often more complicated.

If the business is not producing a significant profit, then its value is usually restricted to the underlying assets it owns. However, if the business is producing a future sustainable profit after paying a reasonable market wage to the owner, then the business may have a significant goodwill value for family law purposes, being multiple of that annual profit.

A business can have a significant value as part of the asset pool in a family law settlement, even if there is no intention to sell and it is planned that the business will continue to operate.

A business may have produced a good lifestyle for the couple during their relationship and all has been going well with the business. However following separation, it is surprising how common it is for one person to claim there has been a sudden and drastic downturn in trading, so that the business is then claimed to be worth nothing!

Valuing businesses is a difficult task and often requires the assistance of forensic accountants. They can investigate and determine the true profitability of the business. Sometimes the parties can agree on one single expert forensic accountant doing the valuation at joint expense. Sometimes there is more than one valuation needed. The process can be time-consuming and costly.

By cooperating and compromising and obtaining suitable expert advice, particularly from a friendly and expert family lawyer, the parties to a property settlement can usually come to an agreement as to their value of their major assets, without too much trouble or expense. This then sets the framework for the parties to reach a sensible resolution of their property issues.