10 Apr Husband Wins at Trial – Awarded 50% of Business Run By the Wife – January 2016
Martin + Colin, P.C. announces that it has won a trial court victory in Supreme Court, Westchester County, for the husband in a highly contested divorce. Throughout the case, the wife claimed that the very successful business started and operated during their long term marriage was entirely the result of her talent alone, without any contribution from the husband. The wife believed that because she was “the face” of the business then she must be “the entirety” of the business.
However, the husband’s testimony at trial established that: throughout the 20+ year marriage, while the wife worked to develop and build the business, from the inside, the husband also worked to develop and build the business, albeit from the outside. In other words: the husband rebuilt the physical structure to make it more suitable for the business; the husband handled payroll, accounting, invoicing, financing and other back office responsibilities; the husband participated in advertising, announcements and other customer contact; and the husband maintained the building and grounds.
At trial, the wife was willing to make a nominal payment to the husband, but was unwilling to acknowledge he was a 50/50 partner deserving of a 50/50 split of the business.
During trial, after letting both parties demonstrate their most compelling evidence, the judge strongly urged a settlement. The judge structured the settlement to grant the husband half of the current fair market value of the business but granted the wife 100% of any increased value, going forward, she could create. With his 50% of the current value of the business, the husband sold his interest in the business to his wife and will spend his time managing and developing the other assets that the parties acquired during the marriage and that he obtained in the divorce.
Notes: To determine the fair market value of the business, the appraiser utilized both the Capitalization of Earnings method as well as the Market Approach method. As the children of the marriage were all over 21 years of age, custody and child support were not factors in this divorce. Be careful what you wish for – in this case, the wife insisted upon a formal appraisal, instead of a casual valuation (such as two times net profit). The formal valuation came in higher than the casual valuation – and cost the wife much more money.
The divorce lawyers at Martin + Colin, P.C. can leveraged their expertise handling prior, similar cases to your advantage. Call us now at (914) 771 7711 and let us apply our expertise to your case.