In a Nevada divorce case, the court considered whether the valuation of the marital portion of a separate property business should be calculated under the Pereira or Van Camp approach. The husband started the business prior to marriage and was a key person in its success.

The Van Camp method generally applies when business value is due more to economic forces than to the efforts of the spouse. Under this method, “if the in-spouse [the husband in this case] working for the claimed separate property business during marriage receives compensation that is equal to or greater than what is fair or reasonable for the services provided, then the community may not have an interest in the business at the date of divorce.” The valuation expert opined that the compensation the husband received was “at least reasonable.” Therefore, the marital estate would have no community interest.

The Pereira method generally applies when business profits are the result of the spouse’s efforts. Under this method, “the value of the business at the date of marriage is allowed a reasonable rate of return/appreciation through the date of divorce. The excess, if any, of the business value at the date of divorce over the separate property value represents the potential value of the community interest.” Using this method, the community property interest value came to $510,000.

The district court ultimately decided that the husband’s company “would not have succeeded without [his] labor, skill and business relationship.” The husband appealed, but the appellate court affirmed, noting that there was “ample evidence in the record that support the district court’s decision to adopt Pereira. The district court did not abuse its discretion.”

The case is Mamone v. Mamone, 2023 Nev. App. Unpub. LEXIS 207; 2023 WL 3579949, and a case analysis and full court opinion are on the BVLaw platform.