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.
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.
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.
State’s high court reverses appellate court on personal goodwill
In South Carolina divorce matters, enterprise goodwill is marital property subject to equitable division, but personal goodwill is not.
Tax rate slipup in dental practice valuation
In a North Dakota divorce case, both sides had expert valuations done on the husband’s dental practice.
Sneed v. Sneed
In this North Carolina appellate divorce case, the court affirmed the trial court decisions, including the determination of value of the husband’s law firm interest. The witness for the wife, who was originally a court-appointed expert, testified as to the value of the law practice and included his analysis of personal-versus-entity goodwill. Both courts included all goodwill in the marital estate as per North Carolina case law. The expert witness apparently submitted a calculation of value for his testimony.
North Carolina Court of Appeals Affirms Trial Court as to Inclusion of Personal Goodwill
In this North Carolina appellate divorce case, the court affirmed the trial court decisions, including the determination of value of the husband’s law firm interest. The witness for the wife, who was originally a court-appointed expert, testified as to the value of the law practice and included his analysis of personal-versus-entity goodwill. Both courts included all goodwill in the marital estate as per North Carolina case law. The expert witness apparently submitted a calculation of value for his testimony.
North Dakota Supreme Court Affirms Choice of Wife’s Expert’s Value of Dental Practice
The North Dakota Supreme Court reviewed several issues regarding the district court’s valuation of and distribution of the marital estate, including the determination of the value of the husband’s dental practice. The district court accepted the higher value of the wife’s expert’s value of the dental practice, noting that the wife’s witness was more credible than the husband’s witness.
Kemmet v. Kemmet
The North Dakota Supreme Court reviewed several issues regarding the district court’s valuation of and distribution of the marital estate, including the determination of the value of the husband’s dental practice. The district court accepted the higher value of the wife’s expert’s value of the dental practice, noting that the wife’s witness was more credible than the husband’s witness.
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.
BV News and Trends May 2023
A monthly roundup of key developments of interest to business valuation experts.
Lieberman-Massoni v. Massoni
The trial court in this New York divorce awarded the value of the husband’s class B units in lieu of awarding a portion of the actual units to the wife and also barred the wife from any distributions on those units occurring after the valuation date.
New York Appellate Court Affirms Award of Value of Husband’s Class B Units in Lieu of Actual Distribution of Share of Units
The trial court in this New York divorce awarded the value of the husband’s class B units in lieu of awarding a portion of the actual units to the wife and also barred the wife from any distributions on those units occurring after the valuation date.
Have you tried Abbott’s passive appreciation calculator?
In last week’s BVWire, we mentioned that Dr. Ashok Abbott (West Virginia University) has developed an online application that produces a passive appreciation factor on a national level for businesses in the retail sector.
Court do-over to figure passive appreciation for divorce
In an Ohio divorce case, the trial court made an award to the wife based on the full fair market value of the husband’s business.
Wife who foregoes expert can’t complain about the outcome
A marital dissolution case in Illinois is another instance of a party not offering a competing valuation and then appealing the outcome—to no avail.
Ohio Appellate Court Remands Value of Businesses for Determination of Active Appreciation
This matter involved cross-appeals from a divorce decree in Trumbull County, Ohio. The focus of this digest relates to cross-appeals relating to the values of the husband’s businesses and the matter of active appreciation on those businesses.
Fordeley v. Fordeley
This matter involved cross-appeals from a divorce decree in Trumbull County, Ohio. The focus of this digest relates to cross-appeals relating to the values of the husband’s businesses and the matter of active appreciation on those businesses.
Chase v. Chase
On appeal, the husband asked the court to review whether the wife needed alimony given the assets she otherwise received in the equitable distribution and her earning capacity as a pharmacist, whether an award of rehabilitative alimony and alimony in futuro by the trial court was appropriate, and whether the trial court’s valuation of the husband’s medical practice was in error. The appellate court affirmed the trial court in all aspects reviewed and did not award legal fees to either party.
Tennessee Appeals Court Affirms Trial Court Decision on Spousal Support and on the Value of Husband’s Medical Practice
On appeal, the husband asked the court to review whether the wife needed alimony given the assets she otherwise received in the equitable distribution and her earning capacity as a pharmacist, whether an award of rehabilitative alimony and alimony in futuro by the trial court was appropriate, and whether the trial court’s valuation of the husband’s medical practice was in error. The appellate court affirmed the trial court in all aspects reviewed and did not award legal fees to either party.
In re Trapp
The primary issue in this Illinois appeal of a divorce decree dealt with the value of a company owning two buildings. The primary tenant in both buildings was the husband’s electrician business. The trial court accepted the value of the real estate company the husband’s business valuation expert, who was not a real estate appraiser, submitted. The business appraiser valued the two buildings using what the court determined to be “competent evidence.”