Denver Divorce Attorneys

Valuation of Intangible Assets in Divorce

During a divorce, you’ll need to make difficult decisions when it comes to the division of your property. This includes who gets to stay in the home or who takes ownership of the dogs. In addition to dividing tangible marital property, you may also need to consider intangible assets.

Valuation of Intangible Assets During Divorce

Valuation, in itself, can be a complicated process. In some instances, a business valuation expert or another sort of valuation professional may be needed. When the value of an asset is difficult to determine, you may have choices as to whether to consult an expert or to sell the property so that the proceeds may be more readily divided. 

Valuation experts use numerous approaches to reach an opinion as to the value of the an intangible asset. For many intangible assets, the most important question as to value involves a prediction as to whether the asset is likely to generate future income.

An intangible asset is an asset that is not physical in nature. This can include brand recognition, goodwill, trademarks, copyrights, patents, royalties, and the list goes on. Dividing intangible is often an issue for those cases where one or both spouses own a business.

The most common approaches to estimate the value of property are the cost, market, and income. These same approaches apply to intangible assets.  

Intellectual Property Valuation Methods

The cost approach for valuing iproperty is based on the economic principle of substitution. Investors will not pay more for an asset than the cost to obtain an equivalent asset by purchasing or constructing a substitute of equal utility. This approach is often used for an asset that is not currently producing income and is not it expected to produce income. If an intrinsic value of an asset must be recorded, the cost approach is typically the one used.

Several cost approach valuation methods exist, the most common include historical cost, replacement cost, and replication cost. But the cost approach has its limits in that it does nothing to explain why similar assets are commonly bought and sold at prices that may exceed the cost. 

The market approach relies on the axis of supply and demand, competition and equilibrium.The value of an asset can be indicated by looking at the selling price of a similar asset exchanged between willing buyers and sellers.

This approach focuses on the economic value of future cash flow derived from a specific property entity. This estimates the present value of property by discounting the future economic benefits of ownership at an appropriate discount rate.

Valuing Patents and Royalties in Divorce

The valuation of your patents and royalties may be the most contentious issue in your divorce, so you will need experienced representation. To learn more about how the divorce attorneys at Litvak, Litvak, Mehrtens and Carlton can help, call us at 303-951-4506.

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