Posted by Nydia Streets of Streets Law in Florida Divorce
When a business interest needs to be divided in a Florida divorce, parties are usually required to hire a forensic accountant to provide expert testimony as to the value of the business, and the accountant usually values it based on the assets held by the business as well as the goodwill associated with the business. In the case Soria v. Soria, 237 So.3d 454 (Fla. 2d DCA 2018), the former husband appealed the trial court’s decision to value his business interest based on the par value of the stock in the business.
The par value is an arbitrary value assigned to a company’s stock which is typically set by the corporate charter. At trial, the former wife argued that the par value of the stock (created by the former husband) should be used to ascertain the value of his interest in the corporation. She also argued that the former husband should be credited in equitable distribution for stocks in the business that he transferred to his girlfriend at the time the dissolution proceedings were initiated. The former husband testified that these stocks were transferred to her to compensate her for the work she performed for the company as an engineer.
On appeal, the former husband prevailed on these issues. The appellate court ruled, “Here the essentially arbitrary par value assigned to ABC's stock bears no relation to ABC's fair market value. The court did not specify the date on which it valued the former husband's ownership interest in ABC. However, no matter which date the court found to be "just and equitable," the court was required to consider both ABC's assets and liabilities when assessing its value. Thus not only did the court err in valuing ABC based on the capitalization scheme, the court further erred in failing to include the company's liabilities. [. . .] And though the court made no findings with regard to goodwill, the former husband testified that he is the business and that the business could not function without him.” (internal citations omitted).
The appellate court further found it was error to punish the former husband for transferring stock to his girlfriend when there was no showing that his conduct was improper. The former husband’s unrebutted testimony was that the stock was transferred for compensation for the girlfriend’s work, and the former wife failed to prove otherwise. Thus the appellate court reversed this ruling with instructions to the trial court to re-do the equitable distribution scheme.
When it comes to protecting your share of marital assets and your separate assets, it is important that you line up the right professionals to assist you in your Florida divorce case. Schedule a consultation with a Miami divorce lawyer to learn what experts may be helpful in assisting you with your Miami divorce case.