Tenn. Appeals Court says DLOM in divorce appropriate under facts of case


Telfer v. Telfer, 2018 Tenn. App. LEXIS 120 (March 5, 2018)

A recent Tennessee appeals court decision found that the trial court presiding over a drawn-out divorce had discretion to apply a marketability discount when it valued the owner-spouse’s interest in two companies in 2016. The value findings preceded the 2017 amendment in which the state legislature expressly addressed the use of discounts in valuing the interest in a closely held business. 

In the instant case, the overarching issue has been appreciation. Initially, the parties litigated over whether the husband was entitled to a portion of the increase in value of his wife’s separate interests in two pass-through entities. For purposes of estate planning, the wife’s father had gifted her interests in two companies whose value increased considerably during the relatively long marriage. In the first appeal, the reviewing court decided the husband had a right to part of the appreciation and it ordered the trial court to value the companies accordingly. 

On remand, the trial court, relying on expert testimony, applied slight discounts when valuing the interests. 

The husband next appealed the trial court’s remand findings. He claimed it was error for the trial court to discount the ownership interests.  

The Court of Appeals disagreed. To read more about the court's analysis, click here.


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