Zachary D. Smith, LLCFamily Law Attorney Cincinnati Ohio2024-03-11T09:48:16Zhttps://www.zdslaw.com/feed/atom/WordPress/wp-content/uploads/sites/1201882/2019/08/cropped-favicon-32x32.pngOn Behalf of Zachary D. Smith, LLChttps://www.zdslaw.com/?p=514272024-03-06T10:48:46Z2024-03-11T09:48:16ZBy establishing the marital portion of the account
Some people mistakenly assume that their retirement savings should remain their separate property when they divorce in Ohio. They may reference how they started the account before they got married or the fact that they are the only account holder as proof that the account is not subject to division. However, deposits made into a retirement savings account during the marriage are typically subject to division in the event of a divorce.
Unless someone protected their retirement account as part of a prenuptial agreement, the amounts added to the account during the marriage are likely subject to division when the owner divorces. An in-depth review of the account can help determine how much of its balance is part of the marital estate and how much remains the separate property of one spouse.
By accounting for or dividing the savings
There are two main approaches to handling 401(k)s and similar accounts during a divorce. In some cases, people establish the value of the account and then factor that into other property division decisions.
It is possible for one person to retain the account if the other spouse receives assets of comparable value in the divorce settlement. The other approach involves the decision to actually divide the retirement savings account. Provided that the spouses divide the account according to the specifications of an Ohio property division order using the right document, they can avoid the 10% penalty and taxes that could be due for prematurely withdrawing funds.
The closer someone is to retirement age, the more difficult giving up a portion of their retirement savings may be. Understanding what happens during the property division process in Ohio may help people feel more comfortable as they address their resources in anticipation of a financially complex divorce.]]>On Behalf of Zachary D. Smith, LLChttps://www.zdslaw.com/?p=514232024-02-28T20:49:52Z2024-02-27T11:33:44ZThe difference between market price and fair market value
At first glance, price and value may seem like interchangeable terms. They are both financial representations of the company's worth. However, they are drastically different figures in many cases. A price reflects a value as a function of a larger transaction - often a transaction with terms requiring the selling party to remain with the company or enter into a non-compete. Additionally, the sale price may include a premium for a strategic acquisition.
The fair market value of a company, on the other hand, is what it is actually worth in its current state. In many cases, the value of a business is substantially different than the price someone might assess when selling the organization. There are actually numerous different ways to accurately assess the value of a business. Looking at the likelihood of continued cash flow and profitability, capital expenditures and the like can give a more holistic and robust valuation.
Oftentimes, those with an ownership interest in a company or professional practice need support with the evaluation process and may also need help strategizing for the protection of the business during their divorces. Those who can establish the value of their business holdings can then begin negotiating a reasonable way to address their ownership interest during their property division proceedings.]]>On Behalf of Zachary D. Smith, LLChttps://www.zdslaw.com/?p=514212024-01-22T17:24:18Z2024-01-22T17:24:18ZOn Behalf of Zachary D. Smith, LLChttps://www.zdslaw.com/?p=514202024-01-17T19:55:46Z2024-01-17T19:55:46ZOn Behalf of Zachary D. Smith, LLChttps://www.zdslaw.com/?p=514192024-01-08T09:38:48Z2024-01-11T09:38:29ZWhat are those three standards of value?
Business valuation is a very complex process that can return very different results depending on who conducts the valuation and what method they use. The three standards of value have a major impact on that process. Those standards are fair value, fair market value and strategic or investment value.
Many people are familiar with the idea of fair market value. They understand that this reflects what price the property would acquire when sold on the open market. This value can be similar to the fair value for the business but more likely to change.
Fair value typically reflects the actual current worth of the business, as opposed to what it might be worth based on the current market. While the fair market value frequently fluctuates, the fair value is typically more stagnant. Both are somewhat subjective.
The same is true of the strategic or investment value of the business. The strategic or investment value of the business is what returns people would receive if they sold the organization. The type of company and the way that the spouses intend to address it in their divorce can influence which of these three standards most strongly influences the valuation process in their divorce.
Sometimes, each spouse decides to perform a valuation, and they may then need to negotiate a compromise based on the different values reached by each spouse or the professionals they’ve hired. Determining the appropriate value for a business can be of the utmost importance for those seeking a fair outcome during an Ohio divorce involving a business or professional practice.]]>On Behalf of Zachary D. Smith, LLChttps://www.zdslaw.com/?p=514182024-01-23T17:25:34Z2023-12-22T14:28:10Zlifestyle analysis can carry significant weight in decisions regarding alimony, child support and a couple’s division of assets. It's a process that demands attention to detail.
Understanding spending patterns
The first step in a lifestyle analysis involves scrutinizing a couple's spending habits. This includes day-to-day expenses like groceries and utilities and more sporadic expenditures such as vacations or luxury purchases. Analyzing these spending patterns helps establish the standard of living, which is essential for fair financial settlements.
Assessing income and assets
Besides expenditures, an analysis also closely examines a couple's income and assets. This encompasses all earnings, investments, properties and valuable possessions accumulated or enjoyed during the marriage, which is crucial for asset division.
Determining non-monetary contributions
During a marriage, contributions extend beyond financial inputs. Non-monetary contributions, including homemaking, childcare and support in career advancement, are significant. These factors are considered in a lifestyle analysis and can impact decisions concerning alimony and support.
Identifying hidden assets and income
One of the critical functions of a lifestyle analysis is to detect any hidden assets or unreported income. This involves meticulously examining financial records to identify any inconsistencies or signs of concealment, better ensuring a fair and transparent division of assets and income.
Impact on alimony and child support
The outcome of a lifestyle analysis can significantly influence determinations related to alimony and child support. Courts use this data to ensure that the financial support provided reflects the standard of living during the marriage, maintaining a sense of fairness and balance.
Given the complexity of conducting a thorough lifestyle analysis, the expertise of financial professionals is often necessary. These professionals analyze financial records, evaluate spending habits and provide an objective overview of the couple's financial situation, contributing to a suitable divorce settlement.]]>On Behalf of Zachary D. Smith, LLChttps://www.zdslaw.com/?p=514142024-01-12T18:36:46Z2023-12-14T14:13:52ZA lot of financially complex divorces involve family businesses, whether those are largely controlled by one spouse or both.
Unfortunately, the issues with valuation of the business are not easily resolved. First, couples have to agree on how the value will be fixed, whether that’s asset-based, income-based, market-based or some other fashion. Then, you have to watch to make sure that nothing unfairly slants the results in one party’s favor.
What are some signs of trouble?
Here are some red flags to watch out for in valuation reports:
Incomplete financial information: Lack of transparency or missing financial data can be a significant red flag. Make sure that the valuation report is based on accurate and complete financial statements.
Failures to look at the market conditions: If the valuation report does not take into account current market conditions, industry trends or economic factors, it may not accurately reflect a true value.
Overly optimistic projections: Unrealistic projections about the future or overly optimistic assumptions about the business's performance may unreasonably inflate the valuation.
Asset undervaluation: Deliberate undervaluation of assets, such as inventory, real estate or intellectual property, can be a tactic to reduce the overall valuation of the business.
Ignored liabilities: If the valuation report does not adequately account for all the business's liabilities, it may result in an inflated valuation.
Inconsistencies in methodology: Inconsistencies in the application of valuation methodologies can raise concerns. Ensure that the chosen valuation approach is appropriate for the nature of the business and that the methods are consistently applied to avoid double counting or biased assumptions.
Conflicts of interest: Be cautious if the appraiser has a conflict of interest, such as a previous relationship with one of the spouses or a financial interest in the outcome of the divorce.
No explanation for decisions: The valuation report should provide a clear and detailed explanation of the methodologies used and the rationale behind key decisions. The inability to defend a valuation and a lack of supporting documents is a big problem.
Inadequate market comparisons: If market comparisons are used, ensure that they are relevant and based on comparable businesses. Using inappropriate or outdated comparables can give misguided results.
If you’re going through a divorce that involves a business, it’s always wisest to have experienced legal guidance on your side.]]>On Behalf of Zachary D. Smith, LLChttps://www.zdslaw.com/?p=514132023-12-05T15:05:06Z2023-12-05T14:50:00ZLearn more about divorce appeals with a free legal resource
We’re committed to educating people about their rights and the legal process, including divorce appeals. Many people aren’t familiar with the basics of this complex area.
We’ve created a free white paper and accompanying SlideShare presentation that covers everything you need to know from a high level. Entitled “Divorce Appeals In Ohio: What To Know When The Judge Gets It Wrong,” the paper will walk you through:
How divorce appeals are different from trials
Which family law orders are appealable
What makes a strong ground for appeal, including examples
What to look for in a divorce appellate lawyer
You can access the white paper and SlideShare for free online. Please don’t hesitate to reach out to our firm with any questions.]]>On Behalf of Zachary D. Smith, LLChttps://www.zdslaw.com/?p=513992023-11-08T07:59:30Z2023-11-13T07:59:09ZProper planning minimizes or eliminates tax risks
There are special rules that apply to property transfers pursuant to a divorce. Provided that there is a property division order and the transfers align with that court issued-document, people can avoid the vast majority of transfer-related taxes.
Retirement accounts are a perfect example. There are often taxes and penalties that reduce the value of specialized retirement savings accounts, like Roth IRAs, if people divide them or take a distribution from them prior to reaching retirement age. However, if the transfer is to a spouse in accordance with a qualified domestic relations order (QDRO), the taxes and penalties that typically apply will not be a concern.
Financial resources and real property ownership are among the resources that people can typically transfer without triggering taxes during an Ohio divorce. Of course, there are limitations on those protections. Generally speaking, the transfers must reflect the terms included in the court order and must occur within six years of the divorce.
Many people with complex, high-value marital estates require assistance when planning to conduct large transfers as part of the property division process in an Ohio divorce. Ultimately, seeking legal guidance and learning more about the different risks and liabilities inherent in divorce proceedings may help people set themselves up for success after the end of a marriage.]]>On Behalf of Zachary D. Smith, LLChttps://www.zdslaw.com/?p=513742023-11-09T18:32:32Z2023-11-09T18:15:42ZA free legal resource on divorce appeals
We recently published a free legal resource on divorce appeals – a white paper entitled "Divorce Appeals In Ohio: What To Know When The Judge Gets It Wrong." It breaks down the basics of divorce appeals, including common grounds for appeal and limitations on the appellate court's ability to overturn decisions. You can download it for free on our website.
We have also prepared a SlideShare presentation summarizing key points from the paper. You can view it below.
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