Smith v. Smith
In this divorce case appeal, the appeals court remanded to the Chancery Court the issue of separate versus marital property. The appellate court determined that one of the husband’s businesses was marital property and not separate property as the Chancery Court decided. It remanded that portion of the Chancery decision with instructions to change the ruling and determine a value for the now marital property business—but without any goodwill.
Appellate Court (Mississippi) Affirms That Goodwill Is Not a Marital Asset
In this divorce case appeal, the appeals court remanded to the Chancery Court the issue of separate versus marital property. The appellate court determined that one of the husband’s businesses was marital property and not separate property as the Chancery Court decided. It remanded that portion of the Chancery decision with instructions to change the ruling and determine a value for the now marital property business—but without any goodwill.
In re Hebert
In this New Hampshire divorce appeal, the husband appealed the trial court’s property division, the awarding of 13 years of alimony, awarding of 100% of the proceeds of the sale of residences, and awarding 50% of the value of the husband’s business and the real estate where the business was located. The Supreme Court of New Hampshire affirmed in part and remanded in part.
New Hampshire Supreme Court Affirms in Part and Vacates in Part and Remands Divorce Trial Court—Husband Fails to Provide Support for Expenses
In this New Hampshire divorce appeal, the husband appealed the trial court’s property division, the awarding of 13 years of alimony, awarding of 100% of the proceeds of the sale of residences, and awarding 50% of the value of the husband’s business and the real estate where the business was located. The Supreme Court of New Hampshire affirmed in part and remanded in part.
Cronan v. Cronan
This case concerned an appeal of a family court magistrate’s decision as to the value of marital assets and the distribution thereof and denial of alimony to the wife. The plaintiff, the husband, is a physician shareholder in a medical imaging practice. The practice had a shareholder agreement that provided for the price to buy into and sell out of the practice. The wife’s expert determined the value of the husband’s shares under the fair market value standard but the trial court and supreme court went with the agreement value.
Rhode Island Supreme Court Affirms Value of Interest in Medical Practice Per Shareholder Agreement and Equitable Distribution of Assets
This case concerned an appeal of a family court magistrate’s decision as to the value of marital assets and the distribution thereof and denial of alimony to the wife. The plaintiff, the husband, is a physician shareholder in a medical imaging practice. The practice had a shareholder agreement that provided for the price to buy into and sell out of the practice. The wife’s expert determined the value of the husband’s shares under the fair market value standard but the trial court and supreme court went with the agreement value.
Untangling Assets and Uncovering the Truth: A Deep Dive into Divorce Financial Forensics
This webinar transcript provides a discussion of methodologies, tools, and techniques needed to untangle complex financials in the context of divorce proceedings ...
No do-over for valuation of business hit by COVID-19
In a Wisconsin marital dissolution case, COVID-19 negatively impacted the husband’s hair salon business, which had to shut down for a while.
Barnes v. Barnes
The trial for this divorce case was extended almost eight months because the parties had assured the court it would be a three-day trial and it took four days. The fourth day was almost eight months after the end of the third day of trial. As a result, the husband argued that the value of his business should have been updated and consideration given to the effect of splitting the business’s real estate from the operations of the business. The appellate court noted that this issue had not been raised at trial and was, therefore, not appealable. Other issues not related to the business were issues for the appellate court.
Tennessee Appeals Court Affirms Trial Court Valuation and Trial Court’s Skepticism of Husband’s ‘Projections’
The trial for this divorce case was extended almost eight months because the parties had assured the court it would be a three-day trial and it took four days. The fourth day was almost eight months after the end of the third day of trial. As a result, the husband argued that the value of his business should have been updated and consideration given to the effect of splitting the business’s real estate from the operations of the business. The appellate court noted that this issue had not been raised at trial and was, therefore, not appealable. Other issues not related to the business were issues for the appellate court.
B.M. v. R.C.
The husband did not engage a valuation of his business, but the wife did. Her valuation expert arrived at a range of values, explaining that he lacked some information and that the information he did have regarding the financial status of the business did not reconcile. As a result, he set a range of values and determined that a range was the most appropriate way to determine the value. The trial court took an average of the range to determine the value for purposes of the marital estate. The supreme court affirmed the lower court decision to average the values.
The Supreme Court of Alaska Affirms the Use of a Range of Value to Determine the Value of a Business
The husband did not engage a valuation of his business, but the wife did. Her valuation expert arrived at a range of values, explaining that he lacked some information and that the information he did have regarding the financial status of the business did not reconcile. As a result, he set a range of values and determined that a range was the most appropriate way to determine the value. The trial court took an average of the range to determine the value for purposes of the marital estate. The supreme court affirmed the lower court decision to average the values.
In re Marriage of Gill
The husband appealed the circuit court’s decision regarding his divorce decree and an order denying his motion to reconsider issues regarding the parties’ property division. He argued the circuit court erred in allocating less than half of the parties’ tax liability to the wife. He also argued the circuit court erred in denying his motion to reopen evidence regarding the impact of COVID-19 on his salon business. The appellate court rejected his arguments and affirmed the circuit court.
Appellate Court (Wisconsin) Affirms Trial Court Allocation of Tax Liability and Business Value in Divorce
The husband appealed the circuit court’s decision regarding his divorce decree and an order denying his motion to reconsider issues regarding the parties’ property division. He argued the circuit court erred in allocating less than half of the parties’ tax liability to the wife. He also argued the circuit court erred in denying his motion to reopen evidence regarding the impact of COVID-19 on his salon business. The appellate court rejected his arguments and affirmed the circuit court.
Gore v. Gore
The key element in the appeal of this divorce case revolved around the valuation of the wife’s business, selling dietary supplements online. The wife failed to produce in a timely manner the documents the husband requested. She also failed to timely declare an expert who could testify as to the value of her business. “Wife appealed the circuit court’s award of monetary sanctions and the court’s exclusion of her and her expert’s testimony regarding her company’s valuation, as well as her attempts to testify regarding the value of her business. Husband cross-appealed the court’s distribution of marital property and the resultant monetary award.”
Appellate Court (Maryland) Affirms Trial Court’s Decision to Exclude Testimony of Wife’s Expert
The key element in the appeal of this divorce case revolved around the valuation of the wife’s business, selling dietary supplements online. The wife failed to produce in a timely manner the documents the husband requested. She also failed to timely declare an expert who could testify as to the value of her business. “Wife appealed the circuit court’s award of monetary sanctions and the court’s exclusion of her and her expert’s testimony regarding her company’s valuation, as well as her attempts to testify regarding the value of her business. Husband cross-appealed the court’s distribution of marital property and the resultant monetary award.”
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Pereira method used for marital interest in construction firm
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.
Faulty information slices personal goodwill in two
In a Utah divorce case, both the joint valuation expert and the expert the husband engaged agreed to the amount of personal goodwill in the husband’s consulting business.
BV News and Trends May 2023
A monthly roundup of key developments of interest to business valuation experts.
Mamone v. Mamone
The Nevada appellate court affirmed the trial court’s use of the Pereira method of determining the value of separate property included in the total value of the husband’s business. It was clear that the value increase in the business during the marriage was due in large part to the efforts of the husband. The “excess value” of the business over the separate property value was included in the community property. The appellate court also affirmed the ruling of the trial court that no community expenses incurred during the marriage were paid from the separate property of the husband and the husband was, therefore, not entitled to any reimbursement of those community expenses.
Nevada Appellate Court Affirms Value of Husband’s Business and His Separate Property Value in the Business
The Nevada appellate court affirmed the trial court’s use of the Pereira method of determining the value of separate property included in the total value of the husband’s business. It was clear that the value increase in the business during the marriage was due in large part to the efforts of the husband. The “excess value” of the business over the separate property value was included in the community property. The appellate court also affirmed the ruling of the trial court that no community expenses incurred during the marriage were paid from the separate property of the husband and the husband was, therefore, not entitled to any reimbursement of those community expenses.
Reasonable comp at center of dental practice dispute
In a Massachusetts divorce case, the wife argued that the normalization adjustments to her salary from her dental practice were based on unreliable data.
Rothwell v. Rothwell
In an appeal of a Utah divorce case, the court affirmed the district court’s determination of value of the husband’s businesses. The district court allowed the exclusion of personal goodwill (in accordance with Utah case law Sorensen v. Sorensen) but did not allow the deduction of estimated tax to be paid on a hypothetical sale of the business at some future date.
Utah Appellate Court Excludes Personal Goodwill, Disallows Reduction for Taxes on Hypothetical Sale
In an appeal of a Utah divorce case, the court affirmed the district court’s determination of value of the husband’s businesses. The district court allowed the exclusion of personal goodwill (in accordance with Utah case law Sorensen v. Sorensen) but did not allow the deduction of estimated tax to be paid on a hypothetical sale of the business at some future date.