Skyrocketed but forgotten crypto figures in divorce case
In an Indiana divorce case, the couple operated a cryptocurrency business, and, after they split up, they entered into a mediated property settlement that awarded “all assets” of the business to the husband.
Business owner spouse stuck with agreed-upon valuation date
In a Pennsylvania divorce case, the wife was the 100% owner of a staffing business, but her husband ran it.
Wife foregoes valuation expert to her dismay
Here’s another case where one party in a divorce matter does not offer a competing valuation and then appeals the outcome.
Wohlt v. Wohlt
In the first instance, this was another case where cryptocurrencies played an important role. While the existence of the cryptocurrencies was forgotten when dividing the marital assets and thus remained with the husband, the trial court, affirmed by the appellate court, had awarded the wife half the value of the cryptocurrencies. Additionally, the trial court determined the value of the cryptocurrencies as of a May 2020 hearing and not as of the date of the mediation. This resulted in a large difference in value being awarded to the wife. The supreme court (Indiana) reversed and allowed the full value of the cryptocurrencies to remain with the husband. The case was, in effect, a contract case, and it was necessary to follow the contract terms, which the supreme court found to be unambiguous.
Supreme Court of Indiana Rules That Forgotten Cryptocurrencies Remain With Husband
In the first instance, this was another case where cryptocurrencies played an important role. While the existence of the cryptocurrencies was forgotten when dividing the marital assets and thus remained with the husband, the trial court, affirmed by the appellate court, had awarded the wife half the value of the cryptocurrencies. Additionally, the trial court determined the value of the cryptocurrencies as of a May 2020 hearing and not as of the date of the mediation. This resulted in a large difference in value being awarded to the wife. The supreme court (Indiana) reversed and allowed the full value of the cryptocurrencies to remain with the husband. The case was, in effect, a contract case, and it was necessary to follow the contract terms, which the supreme court found to be unambiguous.
Donahue v. Donahue
This case is important because it held that the covenant not to compete value was not determinative of the value of personal goodwill. Florida had a law go into effect on July 1, 2024, regarding personal goodwill in divorce. It codified that personal goodwill was not a marital asset. Also, previously, when a business sale required a noncompete or restrictive covenant, its value was generally treated as personal goodwill and, therefore, not part of the marital equitable distribution. Today, however, courts may consider a portion of the restrictive covenant as enterprise goodwill, thereby increasing the value of the marital estate. It was up to the courts to make that distinction and determine whether such instruments should be considered martial assets.
Business’s Goodwill Determined to Be Enterprise Only; Covenant Not to Compete Does Not Change the Nature of the Goodwill
This case is important because it held that the covenant not to compete value was not determinative of the value of personal goodwill. Florida had a law go into effect on July 1, 2024, regarding personal goodwill in divorce. It codified that personal goodwill was not a marital asset. Also, previously, when a business sale required a noncompete or restrictive covenant, its value was generally treated as personal goodwill and, therefore, not part of the marital equitable distribution. Today, however, courts may consider a portion of the restrictive covenant as enterprise goodwill, thereby increasing the value of the marital estate. It was up to the courts to make that distinction and determine whether such instruments should be considered martial assets.
Marouk v. Marouk
The wife argued that the husband’s business valuation expert was not credible or reliable even though she was Accredited in Business Valuation (ABV) and used methods of business valuation common to appraisers. However, the wife did not provide an expert, and the trial court refused to speculate on the value and adopted the value of the husband’s expert. The appellate court found that appropriate and not an abuse of discretion.
Arizona Appellate Court Affirms Business Value When Only One Party Submits a Valuation
The wife argued that the husband’s business valuation expert was not credible or reliable even though she was Accredited in Business Valuation (ABV) and used methods of business valuation common to appraisers. However, the wife did not provide an expert, and the trial court refused to speculate on the value and adopted the value of the husband’s expert. The appellate court found that appropriate and not an abuse of discretion.
Kidan v. Schneider
The ultimate value determination in this case involved questions of the appropriate date of value, a question of whether to consider a transaction subsequent to the date of valuation, and a determination of the amount of personal goodwill.
Pennsylvania Appellate Court Affirms Trial Court Determination of Value of Wife’s 25% Interest in Staffing Business
The ultimate value determination in this case involved questions of the appropriate date of value, a question of whether to consider a transaction subsequent to the date of valuation, and a determination of the amount of personal goodwill.
Ripple effects of Florida’s updated law regarding goodwill
Regardless of whether you practice in Florida, a change in the law there—plus a recent court case—takes the analysis of enterprise versus personal goodwill in marital cases to another level.
Lunt v. Lunt
This divorce case provided a good analysis of personal versus enterprise goodwill and the elements that were included in each. It also discussed the history of personal and enterprise goodwill in Utah that progressively allowed the exclusion of personal goodwill from the marital estate in a divorce in Utah. The general principles of personal versus enterprise goodwill are applicable most everywhere.
Utah Appeals Court Affirms Trial Court Allocation of 5% of Value of Husband’s Website Business to Personal Goodwill
This divorce case provided a good analysis of personal versus enterprise goodwill and the elements that were included in each. It also discussed the history of personal and enterprise goodwill in Utah that progressively allowed the exclusion of personal goodwill from the marital estate in a divorce in Utah. The general principles of personal versus enterprise goodwill are applicable most everywhere.
Court devises own ROT for valuing a plumbing business
In a Nebraska divorce case, neither side offered expert testimony as to the proper methodology for valuing the husband’s plumbing business.
Divorce Power Panel: Trends and Issues in Family Law
The divorce power panel provides insight into some of the hottest topics in family law. The panel consists of top financial experts and family law attorneys who will share their knowledge and expertise in a variety of areas. Among the topics are: current trends and hot topics on divorce financial issues; rules of the game when using a neutral expert; experts acting like lawyers—where do you draw the line?; trial tips and techniques; forensic accounting ...
Blount v. Blount
The appellant wife in this case argued that the trial court failed to divide the marital estate equitably because it did not make an explicit finding of fact as to the valuation of the business that it awarded solely to her but instead only made a finding as to the “excess cash” found in the business. The appellate court affirmed the trial court, explaining that a specific finding of value was not required. (Editor’s note: According to a well-known family law attorney, this likely would be reversible error if specific findings were requested and should be even if not ...
Georgia Appellate Court Affirms Order Allocating Excess Cash From Business to Husband but Fails to Assign Value to the Business
The appellant wife in this case argued that the trial court failed to divide the marital estate equitably because it did not make an explicit finding of fact as to the valuation of the business that it awarded solely to her but instead only made a finding as to the “excess cash” found in the business. The appellate court affirmed the trial court, explaining that a specific finding of value was not required. (Editor’s note: According to a well-known family law attorney, this likely would be reversible error if specific findings were requested and should be even if not ...
Unraveling Financial Deception: Divorce Case Study for Experts
This case study will be an in-depth examination of a high-net-worth divorce case in which financial deception was prevalent. This case involved unreported income, lifestyle discrepancies, and an undervalued family business. Throughout this case study, you will learn forensic techniques to uncover hidden assets, reconcile unreported income with lifestyle expenses to detect discrepancies and learn how to navigate other complex financial challenges. It will discuss the challenges of valuing the family business and expose fraud ...
Court OKs 10% DLOM on a 100% interest
In an Iowa divorce case, the couple owned a successful garden center and the husband’s expert applied a 10% discount for lack of marketability on the value.
Court KOs valuation ‘anchored’ to subsequent event
In a Hawai’i divorce case, the husband owned shares in some banking entities at the time of his marriage in 1990, which was his second marriage.
Casement v. Casement
This case emphasized, as in many other cases, that, absent expert testimony as to a business’s value, the trial court had discretion to determine the value based on the evidence submitted at trial.
Parties Fail to Provide Expert Valuation—Appellate Court Affirms Value of Trial Court
This case emphasized, as in many other cases, that, absent expert testimony as to a business’s value, the trial court had discretion to determine the value based on the evidence submitted at trial.
Skoglund v. Barbour
While the conclusion to this case was still in doubt due to the appellate court remanding the case to determine whether a gift of a business interest in a community property business was harmful to the community estate, this case was a clear example of lack of documentation as to ownership of a business and later transactions relating to the business.
The Court of Appeals (Arizona) Remands to the Lower Court to Determine Whether Husband Breached His Fiduciary Duty to Wife
While the conclusion to this case was still in doubt due to the appellate court remanding the case to determine whether a gift of a business interest in a community property business was harmful to the community estate, this case was a clear example of lack of documentation as to ownership of a business and later transactions relating to the business.