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Divided Court Addresses Issue of Appreciation of Gifted Property

Divided appeals court upholds decision not to award any part of appreciation in separate gifted stock to nonowner spouse; dissent says length of marriage and contributions by wife, regardless of their nature, support equal division of stock appreciation.

In re Marriage of Kerkhoff

Divided appeals court upholds decision not to award any part of appreciation in separate gifted stock to nonowner spouse; dissent says length of marriage and contributions by wife, regardless of their nature, support equal division of stock appreciation.

Appeals Court Signs Off on ‘Slight’ DLOM in Minority Interest Valuation

Appeals court says use of DLOM in valuing interest for divorce depends on interest’s characteristics not owner’s intent to sell the interest, but appeals court affirms trial court’s decision to apply “slight” or no DLOM based on intent to sell analysis.

Court Upholds Inclusion of Premarital Value in Property Distribution

Court says enterprise goodwill valuation of practice was based on expert calculation using excess earnings method and as such is supported by requisite “any” evidence; also, statute allows inclusion of practice’s premarital value in property distribution.

Code & Code

Court says enterprise goodwill valuation of practice was based on expert calculation using excess earnings method and as such is supported by requisite “any” evidence; also, statute allows inclusion of practice’s premarital value in property distribution.

Analyzing Complex Appraisals for Business Professionals

July 2016 978-0071812931 Hardcover (656 pages)

John Lifflander, Shannon Pratt

McGraw-Hill Co.

This guide to understanding, interpreting, and evaluating residential, commercial, business, and industrial appraisals, gives any business professional straightforward, practical steps to achieve sound financial reasoning in the face of numerous valuation intricacies and problem areas. Learn more >>

Lacoste v. Lacoste

Appeals court rejects trial court’s valuation of husband’s fitness training company noting trial court lacked necessary financial evidence as well as testimony from experts; appeals court remands requesting “adequate valuation,” excluding goodwill.

Court Disapproves of Nonexpert Valuation of Key Marital Asset

Appeals court rejects trial court’s valuation of husband’s fitness training company noting trial court lacked necessary financial evidence as well as testimony from experts; appeals court remands requesting “adequate valuation,” excluding goodwill.

Tenn. appeals court muddies the waters regarding use of DLOM in divorce valuation

So much for clarity. A recent Tennessee appeals court decision hinged on the issue of whether a marketability discount was appropriate in the valuation of the husband’s interests in three real estate development partnerships. In reviewing the trial court’s analysis, the appeals court suggested that the lower court misunderstood the principle behind DLOM but ultimately upheld the lower court’s findings. The resulting decision leaves valuators in a pickle as to when to apply the discount and at what rate.

Spouse’s Unilateral Stock Agreement Sets Value in Divorce Action

Appeals court agrees with trial court that valuation in stock agreement is binding in partition action even though non-owner spouse refused to sign agreement and agreement did not mention divorce as one of the circumstances in which valuation applied.

Baumboree v. Baumbouree

Appeals court agrees with trial court that valuation in stock agreement is binding in partition action even though non-owner spouse refused to sign agreement and agreement did not mention divorce as one of the circumstances in which valuation applied.

Mann v. Mann

In appreciation of value case, court agrees with wife’s expert that calculation of marital portion of wife’s interest in family business requires quantification of personal goodwill attributable to wife based on value of noncompete to potential buyer in arm’s-length transaction.

Court Adopts Appreciation Analysis That Places ‘Specific Dollar Value’ on Goodwill

In appreciation of value case, court agrees with wife’s expert that calculation of marital portion of wife’s interest in family business requires quantification of personal goodwill attributable to wife based on value of noncompete to potential buyer in arm’s-length transaction.

In Controversial Move, High Court Strikes Active Appreciation Rule

State high court says plain language of property distribution statute does not permit reclassification of nonmarital property as marital property under active appreciation doctrine; court invalidates doctrine and overrules body of case law applying it.

Court Rejects Bright-Line Rule for Valuing Appreciation of Nonmarital Assets

Marital estate only has claim to increased value of stock from company for which owning spouse works if nonowning spouse can show owner’s active effort “to move the appreciation value from the nonmarital category to the marital one,” appeals court affirms ...

Grant v. Grant

Appeals court says use of DLOM in valuing interest for divorce depends on interest’s characteristics not owner’s intent to sell the interest, but appeals court affirms trial court’s decision to apply “slight” or no DLOM based on intent to sell analysis.

Why Bankruptcy Court declines to be bound by divorce valuation

Following the divorce, the husband filed for Chapter 13 bankruptcy and asked for confirmation of his plan. The issue was whether the plan could meet the liquidation test applicable under the Bankruptcy Code’s section 1325(a)(4). In essence, the test requires that creditors in a Chapter 13 bankruptcy receive present value payments that are at least equal to the amount the creditors would receive in a Chapter 7 case.

Arkansas Supreme Court reverses itself on active appreciation in divorce

Under Arkansas statutory law, the increase in the value of nonmarital property is nonmarital property. But in a line of decisions going back nearly 30 years, the Arkansas Supreme Court created an exception to the statutory rule by way of the active appreciation doctrine, which says that if the growth in value is the result of the owner spouse's efforts, the increase in value is subject to marital distribution.

Lay Testimony About Offer to Buy Represents Admissible Valuation Evidence

Appeals court says nonexpert testimony on a real-world offer to buy owner-spouse’s company was relevant and, therefore, admissible because it provided valuation evidence based on market approach; court remands for rehearing on all valuation testimony.

Florida court resists call for bright-line rule on active-passive appreciation

In this age of entrepreneurship, valuators working on divorce cases often run into the issue of active and passive appreciation. But this issue not only comes up in the context of one spouse's ownership of a business that qualifies as separate property, as a recent Florida appeals court ruling shows. The case involved the husband's separate ownership of stock in a company for which he worked and the stock's substantial appreciation in value during the marriage. The wife asked for a rule "that all appreciation of the stock of a company for which a spouse works is a marital asset."

Florida court explores scope of active/passive appreciation

A Florida appeals court examines the issue of whether the increased value of stock from a company for which the owning spouse works can be a marital asset and subject to distribution.

Ohio Appeals Court Clarifies Provision on Tax Affecting at Divorce

Appeals court says consideration of tax consequences related to owner-spouse’s business is “too speculative” because owner has no plan to sell in near future; trial court improperly assumed current tax rates and business interests would remain constant.

Comparable Transaction Exposes Error in Court’s Enterprise Goodwill Ruling

Appeals court strikes divorce ruling adopting income-based valuation of enterprise value of owner’s financial services business, valuation conflicts with data from similar transaction that occurred close to valuation date and involved owner-spouse.

Industry-specific empirical support for passive appreciation

A survey is open for respondents to indicate which industries they would like to see analyzed for economic causal factors and their elasticities in order to better determine passive appreciation in business assets in a divorce context. The resulting analyses will be published.

Moore v. Moore

State high court says plain language of property distribution statute does not permit reclassification of nonmarital property as marital property under active appreciation doctrine; court invalidates doctrine and overrules body of case law applying it.

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