Category Archives: Divorce Litigation

Two Divorce Cases Provide Valuable Insight

June 13, 2016 | Court Rulings, Divorce Litigation, Valuations

In this article we will discuss two appellate court cases that teach valuable lessons that apply when valuing a business interest in divorce. Legal precedent related to the use of expert witnesses and business appraisals in divorce tends to vary from state to state. But it’s important to monitor case law across the country for emerging  Continue Reading »

Tennessee Appeals Court Straddles Goodwill Issue in Divorce

May 6, 2016 | Court Rulings, Divorce Litigation, Valuations

Lunn v. Lunn, 2015 Tenn. App. LEXIS 515 (June 29, 2015) Tennessee divorce courts seem divided on how to treat the goodwill of a business, specifically on the question of whether to adopt a distinction between enterprise and personal goodwill. The current rule seems to be that, if the business is a solo practice, goodwill  Continue Reading »

Court KOs Ownership Percentage as Rationale for DLOC

April 22, 2016 | Court Rulings, Divorce Litigation, Valuations

Sieber v. Sieber, 2015 Ohio App. LEXIS 2256 (June 15, 2015) Size does not matter, especially when it comes to applying a discount for lack of control. A recent Ohio ruling examines the use of a DLOC where the owner spouse held a small interest in a business, but played a large role in running  Continue Reading »

Why is the Valuation Date so Important?

April 19, 2016 | Court Rulings, Divorce Litigation, Valuations

When considering how the value of an asset will be determined, it is common to contemplate which method the appraiser will use or whether the discounts might apply. However, one critical factor that may not immediately come to mind, is the appraisal date. What’s the Big Deal? One of the main reasons an appraisal’s “as-of”  Continue Reading »

Court Infers Nature of Goodwill From Nature of Business

February 23, 2016 | Court Rulings, Divorce Litigation, Valuations

Rabe v. Rabe, 2015 Ky. App. Unpub. LEXIS 379 (May 29, 2015) An opinion in a divorce case from the Kentucky Court of Appeals, although unpublished, merits attention because it shows the court ruling on the nature of goodwill in a business valuation based merely on the type of business at stake. The opinion also  Continue Reading »

Estimating Replacement Compensation in Divorce

February 5, 2016 | Divorce Litigation, Financial Planning, Valuations

During a divorce, when either spouse owns a private business interest, the divorce settlement is only as reasonable as the value of the business and the compensation of its owners. Replacement compensation can become a controversial issue, especially when the spouse owns a private business and has the control to set his or her salary, benefits  Continue Reading »

A Closer Look at the Excess Earnings Method

January 24, 2016 | Court Rulings, Divorce Litigation, Valuations

Valuation experts often criticize the Excess Earnings Method, calling it ambiguous, over-simplified or outdated. But it’s still used in some jurisdictions as a way to value small businesses and professional practices, especially in a divorce setting. The method was originally created to compensate wineries and distilleries during Prohibition. The Excess Earnings Method is the subject of IRS Revenue Ruling  Continue Reading »

No Automatic Bar to Minority Discount in Divorce Cases

December 29, 2015 | Court Rulings, Divorce Litigation, Valuations

Schickner v. Schickner, 2015 Ariz. App. LEXIS 48 (April 16, 2015) In the context of divorce, may a court apply a minority discount when valuing a minority interest in a business to determine the nonowner spouse’s fair share? This was the primary issue the Arizona appeals court addressed in ruling on the wife’s claim that  Continue Reading »

Lack of Evidence KOs Claim for Goodwill

November 3, 2015 | Court Rulings, Divorce Litigation, Valuations

Reedy-Huffman v. Huffman, 2015 Alas. LEXIS 56 (May 20, 2015) Hire a valuation expert. That’s the message the Alaska appeals court sent in a ruling involving a professional practice caught up in a divorce. The opinion also includes a good summary of the state’s position on goodwill. ‘Evidentiary void’: The husband was a licensed naturopathic  Continue Reading »

Court Deems Treatment of S Corp Undistributed Income ‘Problematic’

April 27, 2015 | Divorce Litigation, Valuations

Diez v. Davey, 2014 Mich. App. LEXIS 2041 (Oct. 23, 2014) How does the law treat undistributed income from a parent’s S corporation for purposes of determining child support? This was the central question in a recent child custody case. The lower court relied on expert testimony that attributed to the owner parent income based  Continue Reading »