Recent Family Law Cases and Business Valuation Impacts

Introduction

A comprehensive review of marital dissolution cases from July 2024 through March 2025 reveals essential considerations for business owners and executives. Courts consistently emphasize proper documentation, accurate valuation dates, expert testimony quality, and the crucial distinction between personal and enterprise goodwill when dividing business assets in divorce proceedings.

When marriages end, business valuations become critical. The cases added to BVLaw between July 2024 and March 2025 provide valuable lessons for business owners who may face divorce. These decisions from courts across 14 states underscore fundamental principles that can significantly impact your financial outcome.

Documentation Matters More Than You Think

The Arizona case Skoglund v. Barbour illustrated how inadequate documentation can create uncertainty around business ownership. The appellate court remanded the case specifically to determine whether a gift of a business interest harmed the community estate. Without clear records of ownership and transactions, even straightforward matters become contested issues requiring additional litigation.

For business owners, this means maintaining meticulous records of ownership transfers, capital contributions, and business transactions. Your documentation today could determine your financial security tomorrow.

The Valuation Date Can Make or Break Your Case

Multiple cases demonstrated that selecting the right valuation date carries enormous financial implications. In Beach v. Beach, an Ohio appellate court reversed the trial court because parties had agreed to a valuation date that predated a $9.4 million PPP loan. The husband's failure to notify his wife or the valuation experts about this loan created a controversy that required remand.

Similarly, Indiana's Wohlt v. Wohlt involved cryptocurrency assets where the valuation date selection resulted in vastly different values. The trial court valued cryptocurrencies at a May 2020 hearing date rather than at mediation, creating a large disparity in the wife's award. The state supreme court ultimately reversed, emphasizing that contract terms regarding asset division must be followed when unambiguous.

Courts consistently apply the known or knowable standard at the valuation date. In Kasnetz v. Kasnetz, Hawaii affirmed that information not known or knowable at the valuation date cannot influence value. Kentucky's Delk v. Delk reached the same conclusion when an FDA investigation resulting in substantial fines was not yet known at the valuation date. These events, though significant, could not reduce the business value for marital estate purposes.

Personal vs. Enterprise Goodwill: A Critical Distinction

The classification of goodwill emerged as a recurring theme across jurisdictions. Indiana's Townsend v. Townsend, South Carolina's Bostick v. Bostick, and Utah's Lunt v. Lunt all emphasized that courts require credible evidence to distinguish personal goodwill from enterprise goodwill. Without expert testimony supporting this breakdown, courts cannot make proper allocations.

Florida's Donahue v. Donahue marked an important shift. Effective July 1, 2024, Florida codified that personal goodwill is not a marital asset. However, the case clarified that covenant not to compete values do not automatically equal personal goodwill values. Courts must now evaluate whether restrictive covenants contain elements of enterprise goodwill, potentially increasing the marital estate value.

For business owners in professional practices or closely held companies, understanding this distinction is essential. Your business value could be substantially different depending on how goodwill is classified.

Expert Testimony Remains the Gold Standard

Courts repeatedly demonstrated their reliance on qualified expert testimony. In Marouk v. Marouk, Arizona's appellate court affirmed the trial court's adoption of the husband's expert valuation even though the wife challenged the expert's credibility. The wife provided no competing expert, leaving the court with only one professional opinion.

New Jersey's Joy v. Joy went further, explicitly stating that the plaintiff husband was not qualified as an expert and could not offer valuation opinions. Most states require expert testimony for business valuations, and virtually all states demand credible evidence supporting any stated value.

Nebraska's Casement v. Casement reinforced that trial courts have discretion to determine value based on evidence when expert testimony is absent, but having qualified experts makes outcomes more predictable and defensible.

Credibility and Methodology Matter

Arizona's Loiselle v. Loiselle illustrated how expert credibility determines case outcomes. The trial court found the father's expert more credible than the mother's expert, and the appellate court affirmed. Courts also upheld the trial court's decision to exclude the mother's expert from the courtroom during the father's expert testimony, demonstrating that separation of witnesses, while common, carries implications for case preparation.

Ohio's Oakes v. Oakes questioned whether projections used in the income approach remained valid when major assumptions failed. Courts scrutinize the foundations of valuation methodologies, particularly when significant equalization payments depend on those valuations. The appellate court even ordered the husband to provide security for the equalization payment due to its size, highlighting how valuation reliability affects enforcement mechanisms.

Special Considerations

Iowa's In re Baedke addressed whether lack of marketability discounts apply to 100% business interests. The Iowa appellate court confirmed that such discounts can be appropriate, likely representing liquidity discounts. This position, backed by prior Iowa case law, affects how controlling interest values are determined in that jurisdiction.

Georgia's Blount v. Blount raised questions about explicit valuation findings. While the appellate court affirmed that specific value findings were not required when the trial court made findings about excess cash, a family law attorney noted this might constitute reversible error if specific findings were requested. This case demonstrates the importance of making proper requests during trial proceedings.

Emerging assets like cryptocurrency continue creating valuation challenges. The Indiana supreme court case involving forgotten cryptocurrency holdings showed how contract interpretation affects asset division, even when both parties initially overlooked the asset.

Key Takeaways

Documentation is your first line of defense. Maintain comprehensive records of business ownership, transactions, and key decisions.

Valuation dates carry enormous financial consequences. Events unknown at the valuation date typically cannot affect value, regardless of their significance.

Personal versus enterprise goodwill matters immensely. Ensure your valuation expert provides credible evidence supporting goodwill classification.

Hire qualified valuation experts. Courts consistently favor cases supported by credible expert testimony over owner opinions or incomplete evidence.

Understand your jurisdiction's specific rules. State laws vary significantly on goodwill treatment, discount applicability, and valuation requirements.

Conclusion

These recent cases demonstrate that business valuation in divorce proceedings involves far more than simply calculating numbers. Proper preparation, documentation, timing, and expert support determine whether you protect your business interests or face unexpected financial exposure. While every divorce situation differs, the principles emerging from these cases apply broadly: document thoroughly, choose valuation dates carefully, distinguish personal from enterprise goodwill, and work with qualified experts who can withstand judicial scrutiny.

Source: BVResources, January 2025