Do-over case may need an active/passive appreciation analysis

BVWireIssue #255-1
December 6, 2023

marital dissolution/divorce
capitalization rate, property division, separate property, marital property, trial court

In an Alaska divorce case, an appellate court (the state's Supreme Court) remanded the case back to the state’s Superior Court because the findings on the husband’s business as marital property were not detailed enough to allow for appellate review.

Biz mash-up: Several businesses were involved, some started before the marriage and some after the marriage, and the lower court treated them all as one entity and classified them as marital property. The husband argued that his business was separate property and was started prior to the marriage and was simply expanded during the marriage by the other businesses. The appellate court agreed that the lower court erred in classifying one of the businesses as started during the marriage and sent the whole matter back to the lower court to do a more thorough analysis. For businesses started prior to marriage, an analysis may have to be done to separate active and passive appreciation in the business value during the time of the marriage.

The case is Lymburner v. Axhelm, 2023 Alas. LEXIS 106; 2023 WL 7017099, and a case analysis and full court opinion are on the BVLaw platform.

Extra: There is an online application that produces a passive appreciation factor on a national level for businesses in the retail sector. It was developed by Dr. Ashok Abbott (West Virginia University) and is available if you click here. Feedback on the app is welcome!

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