The short answer to this question is that the goodwill of a business may be valued in any way the appraiser chooses. The longer answer is that the business appraiser may use any method that does not include impermissible values and that does include values that can be legitimately deduced from past results.
The goodwill value of a business is something that does not show up on the balance sheet. It is often an intangible aspect of the business that ultimately affects the bottom line. California Business & Professional Code defines goodwill in this way: “The ‘good will’ of a business is the expectation of continued public patronage”. It has also been described as a value that is different than capital stock or property of the business.
There are many different types of business that are valued in divorce cases, and, consequently, there are many different aspects to be considered by business appraisers when it comes to a goodwill value. Among the considerations are the following:
- A regular and devoted customer base;
- The length of time in business;
- The likelihood that the business will continue in the future as in the past; and
- The age of the spouse operating the business.
One of the prevalent methods of valuing goodwill is the Excess Earnings Method, which compares the business owner spouse to an employee of comparable experience in the same field. The method then factors in financial details from the performance of the business over a period of time to arrive at a value. The complexity of the method prevents discussion in this forum, but the salient point is that the method uses concrete financial information to arrive at a goodwill valuation.
Another method that has passed judicial muster is the Foster Method, which also uses a comparable salary coupled with financial data of the business. The common thread of these two methods that makes them acceptable to courts is that they are rooted in past performance of the business, and also take into account the likelihood of continued similar results.
The valuation of business goodwill also follows other basic tenets of divorce law. For example, business performance after the parties’ separation may not be used. Similarly, business profitability occurring prior to the marriage of the parties may not be included.
The valuation of a business, that is subject to community property distribution in a divorce, particularly the goodwill component, is a very complicated matter. Its complexity naturally gives rise to intense
California is a “no fault” divorce state. In fact, it was the first state to enact a no fault basis for divorce in 1969. Prior to this change, California state law listed specific faults that, if committed by one of the parties, would be grounds for divorce. These included things such as adultery, extreme cruelty, habitual intemperance, and a number of others. Following enactment of California’s no fault basis, every other state eventually followed suit.
Under our no fault approach, there are only two grounds for divorce and legal separation in California: 1) irreconcilable differences, and 2) permanent legal incapacity to make decisions. Nearly every divorce is filed on grounds of irreconcilable differences. This allows a party to a marriage to pursue a divorce even if her spouse wants to stay married. According to Merriam Webster, irreconcilable means “so different that agreement is not possible.” In a marriage, then, at least one party must believe that agreement on the differences is not possible. Even if the other party states a willingness to agree on differences, they are still irreconcilable if the party of the first part maintains his position.
In the divorce proceeding, the party filing for divorce simply has to tell the court that the marriage needs to be dissolved because there are irreconcilable differences. While the differences are put into the record, no proof of their existence needs to be established. The court just needs to know that one of the parties considers there to be differences, and that they are irreconcilable. The court does have the authority to evaluate each case to reach a conclusion that reconciliation is not possible. In situations where a judge believes reconciliation is possible, he may continue the proceedings for 30 days to see if the parties will reconcile.
Before a divorce petition may be filed, there are residency requirements that must be fulfilled. At least one of the parties must have been a resident of California for six month, and a resident of the county of filing for the immediately preceding three months. If the requirements are not met, the court may refuse to accept the case or will dismiss it when the defect is discovered.
The breakup of a marriage is a difficult life event for both spouses. The attorneys at The Law Offices of Judy L. Burger
have extensive experience in divorce matters. Call today to learn how our attorneys can help you and your family: (415) 298-8314.
When marital problems reach the point where living under the same roof becomes unbearable, there are remedies to that problem under California law. In an ideal situation, the parties to the marriage recognize that it’s time for physical separation, and they work out an agreeable solution. Often, however, that does not happen. If a mutually acceptable solution cannot be found, one party or the other may request that the court decide which one may retain possession of the family home during divorce or separation proceedings. This is known as a residence exclusion order or a “kick-out” order.
In other situations, there may be a real threat or possibility of harm to one of the parties. Under those circumstances, a party may approach the court to have the other party excluded from the home. There are two bases for excluding a spouse from the home when a possibility of physical or emotional harm exists: (1) emergency, and (2) non-emergency.
Under emergency conditions, a court may issue an exclusion order based only on the request of the threatened party. This is also known as an ex parte order because it happens without the excluded party having an opportunity to give his side of the story. This approach is necessary when the excluded party might be expected to react violently to the knowledge that the request has been made. For a judge to issue an ex parte exclusion order, the court must find the following:
- That the party remaining in the home has a right to possession of the premises;
- That the party being excluded has assaulted or threatens to assault the other party or other persons under that party’s care, such as children; and
- That physical or emotional harm would result to the requesting party or others under her care if the order is not granted.
Under non-emergency conditions, the party to be excluded from the home is given notice of the request and has the opportunity to appear at the hearing. The standard for an exclusion order to be issued in this situation is a little less than the emergency order. In this case, the court must find that physical or emotional harm would be suffered by the requesting party, or someone under her care, if the order is not granted. The difference from the emergency order is the absence of an imminent threat of physical assault.
The breakup of a marriage is most always a time of strong emotions for both parties. It is unfortunate that sometimes the emotion turns hostile and even violent. When faced with such a challenging time in one’s life, experienced legal counsel and representation is necessary. The attorneys at The Law Offices of Judy L. Burger have extensive experience in divorce matters, including emergency and non-emergency exclusion actions. Make the call today to learn how our attorneys can protect you and your family: (415) 298-8314.
A Certified Family Law Specialist is, first and foremost, a licensed attorney. There are many attorneys who handle divorce and related family matters, but they may also handle other legal needs such as wills, estates, and personal injuries. A CFLS is an attorney who typically handles only family law cases. Why worry about whether the attorney you hire is certified? A good way to think about that question is to consider the experience she brings to the table. She has many years of extensive practice experience in Family Law.
The certification process is extensive and requires demonstration of education, knowledge, and skills that go far beyond that which would normally be self-possessed by a run of the mill divorce lawyer. Certification processes for various professions assemble the universe of knowledge for the profession and then test practitioners against that knowledge. After doing that, the governing body requires continuing education in order to maintain the certification.
I exceeded many of the minimal requirements in order to become a Certified Family Law Specialist. In addition to the requirements listed below, I was recommended to the Board of Certification by Family Law Judges and Leading Family Law Attorneys.
To be certified as a family law specialist in California, a lawyer must meet several requirements.
- Passage of an examination that tests knowledge of the substantive law and procedures of a legal specialty;
- Demonstrate that she has been substantially involved in the practice of family law for the preceding five years;
- Been principal counsel in 20 contested family law hearings involving specific issues enumerated by the State Bar of California;
- Been principal counsel in five family law hearings or trials that lasted for three hours or more;
- Been principal counsel in a minimum of 30 negotiated family law judgments or settlements;
- Been principal counsel in 30 stipulated temporary family law orders;
- Been principal counsel and principal author of briefs in three California family law appeals in which an opinion was filed; and
- Completion of 45 hours of education in various specific areas of family law.
The standards for certification are overseen and administered by the State Bar’s Board of Legal Specialization. The Board is supported by 11 advisory commissions, one for each area of specialist recognition. One of the important roles of the commissions is the recommendation of revisions to certification standards to reflect the current practice of law in each area. Another is the development and grading of the legal specialist examination.
Cumulatively, the requirements for certification ensure that a Certified Family Law Specialist is an expert in her field. Judy Burger is a Certified Family Law Specialist and an expert in that field. Please contact The Law Offices of Judy L. Burger at (415) 259-6636 or visit online to learn more about how she can help you.