Tag: Equitable distribution business

Unequal Property Division

A Husband recently demanded an unequal property division in his divorce. He wanted more than half of a $225 million fortune, and for his Ex to get about $6 million. He claimed he was entitled to more than half because of his “genius”. Are you entitled to more than half in a divorce?

Valuing Genius

Randy Work, 49, a former executive at Texas-based private equity firm Lone Star, had first claimed that his wife of 20 years, Mandy Gray, was entitled to only $6m because she had an affair with the couple’s personal physiotherapist.

The pair, who are both American and have two teenage children, met in 1992 and married in 1995. They split up in 2013 when Gray began an affair with the couple’s physiotherapist, 44, who she now lives with in a rented flat in Kensington.

A British high court judge rejected the Husband’s claim that he made an “exceptional contribution” to the marriage and was therefore entitled to more than a 50-50 split of the couple’s assets, which include a mansion in West London, complete with swimming pool and fitness center and a ski lodge in Aspen.

Ruling on their divorce in 2015 Justice Holman told the businessman that his wealth contribution – which Work said totaled more than $300m in 10 years – was not “wholly exceptional” and rejected his claim to be a financial “genius”.

“I personally find that a difficult, and perhaps unhelpful, word in this context,” Holman said. “To my mind, the word ‘genius’ tends to be overused and is properly reserved for Leonardo da Vinci, Mozart, Einstein and others like them.”

Work, who has spent at least $3m fighting to keep his wife from collecting half of the family fortune, took the case to the court of appeal which on Tuesday unanimously rejected his appeal against the trial judge’s ruling.

Florida Property Division

I’ve written about property division in Florida many times before. Property division, or equitable distribution as it is called in Florida, is governed by statute and case law.

Generally, courts set apart to each spouse their nonmarital assets and debts, and then distribute the marital assets and debts between the parties. In dividing the marital assets and debts though, the court must begin with the premise that the distribution should be equal.

However, if there is a justification for an unequal distribution, as in the Work divorce, the court must base the unequal distribution on certain factors, including: the contribution to the marriage by each spouse; the economic circumstances of the parties, the duration of the marriage, or any interrupting of personal careers or education.

Additionally, courts can consider the contribution of each spouse to the acquisition, enhancement, and production of income or the improvement of, or the incurring of liabilities to, both the marital assets and the nonmarital assets of the parties.

However, courts generally can’t base unequal distribution on one spouse’s disproportionate financial contributions to the marriage unless there is a showing of some “extraordinary services over and above the normal marital duties.”

The English Divorce

During the divorce hearing Holman had said the case “should be so easy” to settle as there was “plenty of money to go round” and criticized the couple for descending into “unedifying and destructive pugilism”.

“In our view the husband has failed to demonstrate that Holman J’s decision was wrong,” three court of appeal judges said.

London has become known as the divorce capital of the world because British judges tend not to discriminate between breadwinner and homemaker and order equal splits of combined fortunes.

However, Work had hoped to convince the court of appeal judges to allow him to join those few men who had been granted more than half of the combined assets in a divorce in recognition of the “wholly exceptional nature” of their success.

Holman had ruled that although Work was an “astute businessman”, Gray was a “highly intelligent” woman who had given up her career to follow her husband to Tokyo, where he made hundreds of millions of pounds exploiting the Japanese financial crisis.

“A successful claim to a special contribution requires some exceptional and individual quality in the spouse concerned. Being in the right place at the right time or benefiting from a period of boom is not enough,” Holman said.

“It may one day fall for consideration whether a very highly paid footballer, who is very good at his job but may be no more skillful than past greats, such as Stanley Matthews or Bobby Charlton, makes a special contribution or is merely the lucky beneficiary of the colossal payments now made possible by the sale of television rights.”

Holman said Work and Gray, 47, had been “two strong and equal partners” and he would not have been able to amass his vast fortune without her contribution.

The Guardian article is available here.

 

Running the Marital Business After Divorce

By The Law Offices of Ronald H. Kauffman of Ronald H. Kauffman, P.A. posted in Equitable Distribution on Monday, January 25, 2016.

Over 1.4 million businesses are jointly owned and equally operated by husbands and wives, and 1.7 million businesses are jointly owned but run primarily by a husband. Can you run a business after divorce?

The Wall Street Journal has an article today on running a business during and after divorce. The article is primarily aimed at spouses who started and ran a business together during the marriage.

During a divorce, spouses who spent years building a company suddenly find themselves having to divide it up. One spouse may demand a bigger share of the company, another may get defensive about the business’s finances and refuse to divulge details. Old resentments can surface.

The worst case scenario is that you have to liquidate the business, and split any proceeds. When you’re going through a divorce, people don’t always act their best. If you have a bad relationship with your spouse, they may not be compelled to find another solution besides liquidating.

I’ve written about the impact of divorce on business values before. Selling a business is a likely scenario in divorce, whether you live in a Community Property state like California, or an Equitable Distribution state like Florida.

In Florida courts have to set apart the non-marital assets and liabilities, then distribute the marital assets and liabilities between spouses. The court starts with the premise that the distribution should be equal, unless there is a reason for an unequal distribution.

Some of the reasons for dividing property, including businesses, unequally are:

(1) The economic circumstances of the parties.

(2) The duration of the marriage.

(3) Interruption of personal careers or educational opportunities.

(4) The contribution to the personal career or education of the other spouse.

(5) The desirability of retaining an interest in a business intact and free from any claim or interference by the other party.

(6) The contribution of each spouse to the acquisition, enhancement, and production of income.

(7) The intentional waste, depletion or destruction of marital assets.

If spouses can’t live with each other, there’s a good chance they won’t be able to work together either. However, to stay in business together, couples need ask some questions:

– Will you be more successful together or apart?

– Are the children better off if the business closes?

– Can you communicate effectively with each other?

– Can you define new boundaries at work?

While it’s impossible to take emotions entirely out of the process, businesses do survive divorce, and the emotional turmoil can be minimized.

The Wall Street Journal article is here.