Forensic Accounting Perspectives : New York Business Valuation, Divorce, Business Disputes, Shareholder Disputes, Litigation Support & Accounting Forensics in Connecticut, New York & New Jersey

I recently sat down and did a podcast with Leonard Florescue, a family law attorney at Blank Rome LLP, who advises clients primarily in complex matrimonial matters. We discussed the role parenting plans play in the divorce process.

Among the most important aspects of family law are custody and parenting plan issues. The family law practitioner is expected to take great care to work with his or her clients to create a viable parenting plan, which is an agreement between parents, who are either divorcing or who have never married.

In the simplest terms, a parenting plan establishes who will spend time with the children and when and under what circumstances. The parenting plan also determines who makes the major decisions about education, medical care and other important issues.

A good parenting plan is necessary in promoting harmony and alleviating stressful situations for both parents and children. There can be serious repercussions when parents have either a poorly though-out parenting plan or no plan at all.

In an organizational or government hierarchy, there's a single person or group with the most power and authority, and each subsequent level represents a lesser authority. Parents must create a "hierarchy" of their own.

Time sharing is often a very stressful topic for parents. When outlining shared parenting schedules, parents must try their best to avoid potential areas of stress.

It's also advisable for parents to create a formula for the events they are anticipating for the first years of the parenting plan's existence.

I know parental death is a subject a lot of parents don't want to consider, but we're all mortal, and one or both parents may die during children's minority. By incorporating clauses in a parenting plan that address times of tragedy in a family as the passing of a parent, conflicts over relatives spending time with the children can be pre-empted.

When the parents, for whatever reasons, can't agree to a mutually agreed parenting schedule, the final arbiter in this situation is the Court.

To learn more about parenting plans, please listen to our podcast with Leonard.

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This week, I sat down with Peter Mahler, a corporate attorney at Farrell Fritz, who is widely known as an authority on corporate dissolution and valuation proceedings involving closely-held businesses (which he blogs about over on New York Business Divorce Blog).

First, we discussed how there are times when the accounting and legal professions meet and form a synergy that complements one another. But there are also times when terms and definitions must be distinguished and defined based upon facts and circumstances. The concept of "Fair Value" is one of those terms. A federal Appeals Court once remarked that "the valuation of a closely held company is an inexact science, some might say an art."

The Model Business Corporation Act in 1984 created the right of a shareholder to dissent from corporate decisions and obtain payment of the value of his or her shares. The shareholder is entitled to receive the "fair value" of his or her shares in case of dissent.

But the simplicity of the term "fair value" is misleading, as there are many questions to be answered and important factors to be considered in order to reach such "fair value." Minority shareholders have been granted a number of rights to protect their position inside a corporation and advance their interests. One of these rights is the appraisal right--the right to dissent and obtain payment of fair value of their shares.

Fair value can be defined in a number of ways and each definition may be correct. Unlike the standard of value known as Fair Market Value, which is defined within the Internal Revenue Code, Fair Value Standard is considered to be defined by various authorities and statutes.

When a minority shareholder established "oppressive" majority conduct, a court typically orders the majority control to purchase the minority's stock at its fair value. What fair value means and when it should be measured are crucial questions that can affect close corporation investors, frequently resulting in litigation.

Many agree with the idea that fair value should be defined as enterprise value in the context of shareholder oppression. In other words, the buyout remedy should provide the oppressed minority investor with his or her pro rata share of the company's overall value--with NO reductions for the lack of control or liquidity associated with the minority's shares.

It is also the opinion of many in the legal and accounting services community that courts should allow an oppressed shareholder to choose between the date of filing and the date of oppression as the appropriate valuation date.

If you would like to learn more about the fair value standard, please listen to our podcast with Peter.

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