In case of valuation of family law courts, in fact, courts often mix standards of value with valuation methods. For example, one opinion recognized…

In the context of family law, courts have historically grappled with the valuation of intangible assets like professional goodwill. Landmark cases, such as In re Marriage of Lopez, have established precedents that are often cited. These judicial opinions frequently blend the concept of a standard of value (e.g., Fair Market Value, defined by a willing buyer and seller) with specific valuation methodologies. The court in Lopez explicitly recognized that goodwill's value could be approached by considering what a willing buyer would pay (A) and also approved the capitalization of excess earnings method (B) as a way to quantify that value. This illustrates the common judicial practice of treating both the standard of value and the method as "fair acceptable methods" for valuation in marital dissolution cases.

A. This is incomplete. While the "willing buyer" concept defines the standard of value, courts also explicitly approve specific valuation methods to arrive at that value.

B. This is incomplete. Courts often frame the valuation problem by first referencing the "willing buyer" standard of value before discussing acceptable calculation methods.

C. This is a "rule of thumb." Such rules are generally considered too simplistic and arbitrary for formal court proceedings, which prefer more rigorous valuation approaches.

1. In re Marriage of Lopez, 38 Cal. App. 3d 93, 109-110 (Ct. App. 1974). The court opinion states, "...the value of community goodwill is not necessarily the specified amount of money that a willing buyer would pay... In valuing community goodwill, the court should consider... any other facts which bear upon its value... such as the capitalization of excess earnings..." This primary legal source directly supports the inclusion of both concepts.

2. Pratt, S. P., & Niculita, A. V. (2008). Valuing a Business: The Analysis and Appraisal of Closely Held Companies (5th ed.). McGraw-Hill. In Chapter 29, "Valuation for Marital Dissolution Purposes," the text discusses how case law, including Lopez, has shaped the acceptance of various methods, including the excess earnings method, within the framework of fair market value.

3. Hitchner, J. R. (2017). Financial Valuation: Applications and Models (4th ed.). Wiley. Chapter 3, "Standards of Value," and Chapter 29, "Valuation of Intangible Assets," detail how different legal contexts, such as family law, apply standards of value and often specify or approve certain methodologies like the capitalization of excess earnings.