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A decision announced recently by the Supreme Court of Rhode Island, McCulloch v. McCulloch, 69 A.3d 810, illustrates why buyouts are generally favored over in-kind distributions of stock when dividing the value of family businesses in equitable distribution proceedings. The trial court in McCulloch, faced with uncertain valuations of the businesses from both sides and a court-appointed expert, elected to award 25% of the stock to Wife and 75% to […]

Valuation of commercial real estate and rental properties is an issue that arises in high-asset divorce proceedings. Real estate appraisal is sometimes performed within a business valuation, if the business owns real estate. In 2011, the U.S. Tax Court issued an opinion addressing real estate valuation in a case where competing experts offered two different methods. Like most Tax Court cases, this opinion involved an owner who had passed away, […]

The opinions of the U.S. Tax Court in estate valuation cases can be instructive guidance on legal and valuation principles that are equally relevant to divorce cases. A recent decision of the Tax Court in an estate taxation case contains an excellent summary of those principles, as well as the latest thinking on a variety of hot valuation topics, including normalization of financial statement, tax-affecting of Subchapter “S” corporations, and […]

Last month the Wisconsin Supreme Court weighed in on two issues that are important to family lawyers and their clients who operate professional practices like physicians, lawyers, dentists and accountants. In Marriage of McReath, the Wisconsin Supreme Court ruled that “saleable” goodwill would be considered marital property, in a case where a dentist argued that “personal” goodwill should not be counted as part of the marital estate. The Court also […]

When business owners get divorced, their settlement may have profound consequences for the business and other owners. Often, one spouse “sells” or gives up a share of the business to the other spouse. Since most small business owners do not have enough cash to pay a lump sum for that share, they might have to make installment payments over months or years. It is critical to structure the divorce settlement […]

A recent decision of the Iowa Court of Appeals illustrates the perils of reliance upon industry rules of thumb to value a business in matrimonial litigation. In Marriage of Hagar (11/24/2010), husband and wife purchased a dry cleaning business from a trust established by husband’s parents as part of a business succession plan. Husband and wife agreed to a $300,000 purchase price that was determined by the companies’ accountant. The trust […]