"Center Point provided a very detailed discount appraisal report for fractional interests in real property."
Marital Dissolution (San Diego County)
The valuation of a business in a marital dissolution in San Diego County is subject to local court rules that an appraiser must follow. San Diego Superior Court Rule 5.12.8, Appraisal of Closely Held Business Interests, requires the following:
- Standard of Value for Business Appraisal - The standard of value is marital value which means the investment value of the business interest to a hypothetical, objective investor, considering the following factors:
- Since there will be no change of ownership, there will be no reduction in value to reflect the risk inherent in a transfer of the business interest.
- Pursuant to Family Code section 771, in establishing sustainable earnings, separate property earnings attributable to the operating spouse’s efforts after the date of separation will not be considered.
- There will be no reduction in value for capital gain or other taxes associated with sale.
- A business may have marital value even though it is not saleable.
- The business interest being valued may include assets and liabilities which would not be included in sale, such as cash, accounts receivable, accounts payable and non-operating assets and/or liabilities.
- Procedure to be Followed in Appraisal Process – Describes in detail the process of selecting a joint appraiser and the date of valuation.
- Appraisal Reporting Requirements – Requires the appraiser to document the reasons and factors considered in the selected appraisal method(s), the capitalization rate, owner compensation estimates, and any other adjustments, assumptions or estimates made in the appraisal process.
The appraiser must be knowledgeable of both local court rules in San Diego County and California community property statues and case law specific to business valuations in marital dissolution situations, specifically with regard to business income, owner compensation, personal vs. professional goodwill, community vs. personal property, and other considerations.
Center Point offers the valuation report Marital Valuation that is specific to business valuations in marital dissolution cases in San Diego County. This report includes all of the elements necessary to understand the value of a business in the context of a marital dissolution.