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Great turnout for the AAML/BVR National Divorce Conference

The AAML/BVR National Divorce Conference harkened back to prepandemic times as family law attorneys and valuation experts met in person in Las Vegas September 18-20.

Divorce Highlight: Last chance—AAML/BVR Divorce Conference starts Sunday September 18

Connect with divorce attorneys from across the US at the AAML/BVR National Divorce Conference in Las Vegas September 18-20.

Divorce Highlight: PPP loans, goodwill, BIG tax in recent divorce cases

How do you treat a PPP loan in a marital dissolution case?

Divorce Highlight: Hitchner’s wrath continues regarding Damodaran’s attacks

Speaking at the NACVA’s Business Valuation & Financial Litigation Super Conference last week, Jim Hitchner (Valuation Products and Services) continued his strong rebuttal of some severe criticisms Aswath Damodaran (New York University Stern School of Business) made during a recent BVR webinar about certain inputs to the cost of capital (see prior coverage here).

Divorce Highlight: What’s in a judge’s mind?

In divorce matters, the most important audience is often the trier of fact, so anytime you can glean insights from them is time well spent.

Divorce Highlight: Forging the attorney-expert relationship

“One of the things I suggest to younger family lawyers is to make relationships with experts,” says Jay Fishman (Financial Research Associates) in a recent interview with Family Lawyer Magazine.

Simons v. Simons

The Nebraska Supreme Court allowed a fair value determination by the wife’s expert as the appropriate value for a divorce case and did not include any discounts that might apply in a fair market value determination. Much of the opinion dealt with the issue of a constructive trust, which the trial court determined results in a 50% ownership by the wife in the family business.

Nebraska Supreme Court Allows Fair Value Determination for Family-Owned Business and Does Not Allow Discounts

The Nebraska Supreme Court allowed a fair value determination by the wife’s expert as the appropriate value for a divorce case and did not include any discounts that might apply in a fair market value determination. Much of the opinion dealt with the issue of a constructive trust, which the trial court determined results in a 50% ownership by the wife in the family business.

Divorce Highlight: Something for everyone at the AAML/BVR Divorce Conference

The breadth of topics run from basic to complex at the 2022 AAML/BVR National Conference, which will be held on September 18-20 in Las Vegas.

Divorce spotlight: valuing a family business with complex ownership

When a family business caught up in divorce is not a simple 100% ownership, things can get complicated—from both a valuation and legal perspective.

Weinstein v. Weinstein

In this Vermont divorce case, the Supreme Court affirmed the value of the husband’s law practice even though there was evidence of some potential personal goodwill left in the value determined by the lower court. The Supreme Court also affirmed the wife’s expert’s determination of the husband’s income for maintenance purposes. Note that, per the court, “decisions of a three-justice panel are not to be considered as precedent before any tribunal.”

Vermont Supreme Court Affirms Value of Husband’s Law Practice, Declines to Eliminate Personal Goodwill, Affirms Determination of Husband’s Income

In this Vermont divorce case, the Supreme Court affirmed the value of the husband’s law practice even though there was evidence of some potential personal goodwill left in the value determined by the lower court. The Supreme Court also affirmed the wife’s expert’s determination of the husband’s income for maintenance purposes. Note that, per the court, “decisions of a three-justice panel are not to be considered as precedent before any tribunal.”

New Toolkit for Passive Appreciation Takes Shape

BVR and Dr. Ashok Abbott (West Virginia University) are developing an automated tool and supporting documentation that embodies his peer-reviewed methodology for separating active from passive appreciation of business assets in a divorce context.

Hollis v. Hollis

One of the main issues in this appeal was how to classify the husband’s “book of business,” i.e., his client relationships, assets under management, and related income. The husband was a financial advisor for UBS. The wife contended the book of business had value that constituted a marital asset. The husband pointed out that UBS now took the position that a financial advisor who left the company cannot take any information with him or her. The court also noted that “deferred cash agreements” were actually bonuses that were marital assets. The appellate court affirmed the trial court’s decision to exclude the book of business from marital assets. The court also affirmed the trial court decision on payment of alimony to the wife “in futuro.”

The Tennessee Appeals Court Affirms the Trial Court’s Decision to Exclude From the Marital Estate Financial Advisor the Husband’s ‘Book of Business’

One of the main issues in this appeal was how to classify the husband’s “book of business,” i.e., his client relationships, assets under management, and related income. The husband was a financial advisor for UBS. The wife contended the book of business had value that constituted a marital asset. The husband pointed out that UBS now took the position that a financial advisor who left the company cannot take any information with him or her. The court also noted that “deferred cash agreements” were actually bonuses that were marital assets. The appellate court affirmed the trial court’s decision to exclude the book of business from marital assets. The court also affirmed the trial court decision on payment of alimony to the wife “in futuro.”

Husband shuns BV expert, loses case

In a Pennsylvania divorce case involving a restaurant, neither the husband nor the wife submitted formal business appraisals.

King v. King

In this Maryland divorce case, the Court of Special Appeals affirmed the trial court on all appealed issues including marital property determinations; monetary award to the wife; determination of incomes of the husband and wife; and determinations of alimony, child support, and related expenses. The Court of Special Appeals also affirmed that the husband’s business was not a gift and was marital property, and it determined the value of the business as the wife’s expert presented. Both parties were forensic accountants.

Maryland Appellate Court Affirms Trial Court on Value of Husband’s Business as Well as Several Other Divorce-Related Issues

In this Maryland divorce case, the Court of Special Appeals affirmed the trial court on all appealed issues including marital property determinations; monetary award to the wife; determination of incomes of the husband and wife; and determinations of alimony, child support, and related expenses. The Court of Special Appeals also affirmed that the husband’s business was not a gift and was marital property, and it determined the value of the business as the wife’s expert presented. Both parties were forensic accountants.

Appeals court vacates going-concern valuation for firm being wound down

In an Arizona divorce case, the couple owned a business that was being phased out.

Nothing personal about goodwill in dental practice

In a South Carolina divorce case, the appellate court reversed the family court on the issue of personal versus enterprise goodwill.

Snyder v. Snyder

In this Pennsylvania divorce matter, the appellate court accepted the wife’s valuation of the marital business using the “gross sales approach,” despite the husband’s objection that she was not qualified to determine the value. The trial court master recommended the wife’s value be accepted. However, the appellate court finds that the trial court double counted four business assets and remanded for a redetermination of the marital estate.

Court Affirms Acceptance of the Wife’s Gross Sales Valuation Method for the Marital Business, Remands for Double Counting of Business Assets

In this Pennsylvania divorce matter, the appellate court accepted the wife’s valuation of the marital business using the “gross sales approach,” despite the husband’s objection that she was not qualified to determine the value. The trial court master recommended the wife’s value be accepted. However, the appellate court finds that the trial court double counted four business assets and remanded for a redetermination of the marital estate.

Full agenda for the AAML/BVR divorce conference

The full agenda has been posted for the National Divorce Conference, sponsored by the American Academy of Matrimonial Lawyers (AAML) and BVR.

No proof of personal goodwill in Utah divorce case

In some states, personal goodwill in a business is not part of the marital estate—but you have to have evidence that it exists.

Purchase price equals value of business caught up in divorce

In Wisconsin, the valuation opinions of two experts were deemed not credible for a business caught up in a marital dissolution.

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