Tag: Equitable Distribution Premarital Assets

Equitable Distribution of Personal Injury Awards

Posted by Ron Kauffman on

Comedian Tracy Morgan is not amused a court may have to consider the equitable distribution of his multi-million-dollar personal injury award after his terrible accident. Less than a month before his fifth wedding anniversary, he and his Wife announced they filed for divorce.

personal injury

The Rock

“Sadly, after nearly five years of marriage, Megan and I are filing for divorce,” Morgan confirmed in a statement to E! News on Wednesday, July 29.”This is a challenging time for all involved, so I ask that you please respect our privacy.”

It’s also been three years since a Walmart truck slammed into the back of Morgan’s limo van on the New Jersey turnpike. His friend, comedian James McNair, was killed and two others were seriously injured.

Morgan suffered a broken leg, broken ribs and what his lawyer describes as a “traumatic brain injury.” One year after the crash, he talked about the long road to recovery.

The truck driver in the accident, Kevin Roper, later pleaded guilty to vehicular homicide. Walmart took full responsibility for the crash and awarded Morgan and one of the other passengers a settlement that has been reported to be as high as $90 million.

Will Tracy’s wife be entitled to any of the personal injury settlement between Walmart and Tracy?

Florida Divorce Personal Injury Awards

I have written about equitable distribution in Florida before. In a proceeding for dissolution of marriage, in addition to all other remedies available to a court to do equity between the parties, a court must set apart to each spouse that spouse’s non-marital assets and liabilities.

When distributing the marital assets between spouses, a family court must begin with the premise that the distribution should be equal, unless there is a justification for an unequal distribution based on all relevant factors.

What about a $90m personal injury award? The supreme court of Florida has held that in determining whether a worker’s compensation award is marital property, the trial court should use an analytical, rather than a mechanistic or unitary, approach.

The court should consider the purpose of the award and focus on the award’s “elements of damages.” Only that portion of damages paid to the injured spouse as compensation for past lost wages and loss of earning capacity is to be considered marital property and subject to equitable distribution.

Damages for future loss of earnings and loss of earning capacity and future medical expenses are considered to be the non-marital, separate property of the injured spouse.

Keep in mind that the award may be considered in fashioning alimony and support awards.

The Hard Place

Wollover, 33, made the request in her divorce filing. She also wants the “30 Rock” star to pay her alimony as agreed upon in their prenuptial agreement, which they signed on Aug. 5, 2015.

Morgan, 51, filed his response one day after Wollover and requested joint legal and shared residential custody of their daughter, according to docs. He also wants the court to allocate parenting time “in the best interests” of Maven.

“Sadly, after nearly five years of marriage, Megan and I are filing for divorce,” Morgan said in a statement to Page Six following Wollover’s divorce filing. “This is a challenging time for all involved, so I ask that you please respect our privacy.”

The news of Morgan’s split comes just a few months after he made comments about their sex life while in quarantine during a TV interview in April.

On a more serious note, in an interview with Oprah Winfrey after recovering from the car crash, he called Wollover “a strong woman” for how she oversaw his treatment in the hospital.

“I’m glad I’m here,” he told Winfrey during their sit-down at the time. “I’m glad my wife is over there.

The E online article is here.

A Slice of Equitable Distribution and Alimony

Posted by Ron Kauffman on

The wife of Papa John’s founder John Schnatter filed for divorce, claiming her marriage with the unemployed pizza executive is “irretrievably broken,” according to court papers filed in Kentucky. If there is no prenuptial agreement, how big a slice of equitable distribution of the stock and any alimony is Annette entitled to?

Slice of Equitable Distribution

When the Moon Hits Your Eye

Papa John’s is an American pizza restaurant franchise. It runs the fourth largest pizza delivery restaurant chain in the United States, with headquarters in Jeffersontown, Kentucky, a suburb of Louisville.

Papa John’s was founded in 1984 when “Papa” John Schnatter knocked out a broom closet in the back of his father’s tavern, Mick’s Lounge, in Jeffersonville, Indiana. He then sold his 1971 Camaro Z28 to purchase US$1,600 worth of used pizza equipment and began selling pizzas to the tavern’s customers out of the converted closet.

John’s pizzas became so popular he moved into the adjoining space. The company went public in 1993 and a year later it had 500 stores. By 1997 it had 1,500 stores. And in 2009, John got his Camaro Z28 back after offering a $250,000 reward.

Schnatter and Annette Cox, 59, had been married since April 11, 1987, and separated on April 1 of this year, the wife’s attorney Melanie Straw-Boone writer in papers filed in Oldham Circuit Court. Cox called Schnatter a 57-year-old Louisville resident who “is not employed,” according to the boilerplate, three-page petition.

“The marriage between petitioner and respondent is irretrievably broken”.

The couple have two children and share unspecified real estate holdings, the filing said. Schnatter stepped down as CEO in late 2017 after reports surfaced that he uttered a racial slur during a conference call.

Alimony, Equitable Distribution, and the Length of Marriage

In Florida, the duration of marriage is an important topping in divorce cases. I’ve written about the types of alimony awards available in Florida before. For instance, Florida Statutes dealing with alimony specifically limit the type of alimony awards based on the duration of the marriage.

So, for determining alimony, there is a rebuttable presumption that a short-term marriage is a marriage less than 7-years, a moderate-term marriage is greater than 7-years but less than 17-years, and long-term marriage is 17-years or greater.

Florida defines the duration of marriage as the period of time from the date of marriage until the date of filing of an action for dissolution of marriage.

The duration of marriage can also be a large slice of the property division. When a court distributes the marital assets and liabilities between the parties, the court begins with the premise of an equal split.

However, there are times and cases which justify an unequal distribution based on several relevant factors. One of the factors a court can consider is the duration of marriage, in addition to other factors.

Dividing assets between spouses – especially large companies such as Papa John’s – is not as simple as taking a pizza cutter to a hot pie; even with agreements. Very often assets have appreciated over the course of several years. The longer the marriage is, the more a business interest can appreciate. When property appreciates, you need to distinguish between passive and active appreciation. A passive asset could be an investment account which is never traded.

A business, on the other hand, is an active investment, and the percentage a spouse is entitled to may depend on different things. Even with the most sophisticated couples, such as the Schnatter/Cox family, unless you clairvoyant, issues will arise that no one considered in earlier agreements, and are prime for negotiation.

Pizza Ready?

Separate from the divorce case, Schnatter filed a lawsuit Thursday against an advertising firm which was at the center of the racial slur incident.

Schnatter allegedly uttered the slur during a call with advertising firm Laundry Service, which the pizza executive accused of recording him without his consent. The lawsuit claims that Laundry Service leaked excerpts of the conference call, which broke a nondisclosure agreement.

Two weeks ago, Schnatter accused his former company of making substandard pizza. He said his former company has failed in keeping up with its long-time slogan: “Better Ingredients, Better Pizza.”

“I’ve had over 40 pizzas in the last 30 days, and it’s not the same pizza,” Schnatter told WDRB, a Fox affiliate in Louisville, Kentucky. “It’s not the same product. It just doesn’t taste as good.

The NBC News article is here.

 

Divorce and Business Property Division

Posted by Ron Kauffman on

When one of Zach Hendrix’s three business partners said he was getting divorced, sympathy turned into shock as everyone realized that a soon-to-be ex-wife could become a co-owner. Understanding the law around business and property division in a divorce is the first step to protecting yourself.

business property divisions

Open for Business

When a small business owner divorces, the company can become part of a property fight; the battle can end with owners losing all or part of their businesses. Or, they or the company may be forced to take on debt to prevent an ex from sharing ownership.

Even when ownership isn’t at stake, the rancor and uncertainty around a divorce can take a toll on a company — owners may be distracted and unable to focus on what the business needs.

Hendrix and two of his co-owners had to borrow a combined $250,000 to buy out their partner in 2017 after he announced his divorce plans. A startup, and not in a position to get that much credit, the three had to personally guarantee the loans. They were able to repay the debt in a year and a half out of their profits.

The divorce was a learning experience for the partners. When they started, they hadn’t written what’s known as a buy-sell agreement that creates a process and sets a price for buying out a partner.

Florida Business Property Division

I have written about property division recently. Florida is an equitable distribution state when it comes to dividing businesses in divorce.

In a proceeding for dissolution of marriage, in addition to all other remedies available to a court to do equity between the parties, a court must set apart to each spouse that spouse’s non-marital assets and liabilities.

There are several factors to know whether a business interest is marital. First, you will need to look at the date of marriage and the date the business interest was acquired.

Additionally, you should look to the source of funds used to start the business, and also if there were money and labor contributions to the business given by either spouse during the marriage. In distributing the marital assets and liabilities between the parties, the court must begin with the premise that the distribution should be equal, unless there is a justification for an unequal distribution.

Whenever an agreement cannot be made between the spouses, the court’s distribution of marital assets or marital liabilities must be supported by factual findings and be based on competent evidence.

Once you have determined whether an interest in a business is marital, how do you actually determine what that interest is worth?

There are three approaches to value a business interest: (1) the asset approach; (2) the income approach; and (3) the market approach.  Each approach has inherent strengths and weaknesses.

Any valuation expert should consider all three approaches; however, it is often the case that all three approaches cannot be applied.

Back in business

The emotional fallout from a divorce can affect co-owners and employees. In his settlement with his wife, Jeffrey Deckman agreed to pay her $100,000 over four years; that amount was half what his telecommunications business was valued at.

Deckman borrowed money to make the payments, but having that debt hanging over him created stress that spilled over to his company.

“I started getting edgy, short-tempered, pushing hard for (sales) numbers that I never pushed so hard for before.”

He began fighting with his two business partners, and the discord affected everyone who worked there. It took six months for Deckman to realize what he was doing. “It showed me on a certain level that I hadn’t accepted responsibility for the deal I made,” he says.

But by the time Deckman understood that “I was making people pay,” he had damaged his relationship with his partners and staffers. In 2005, two years after the divorce, he realized that he needed to withdraw from working in the company, and in 2008 he sold his stake. Deckman, who now does consulting for small and mid-sized companies, believes despite losing his share of the business that he did the right thing in his divorce settlement.

He says of his ex-wife: “Today, years later, we are great friends and our children benefit greatly because of it.”

The Detroit News story is here.

 

Today’s Property Division

Posted by Ron Kauffman on

According to People, former Today Show anchor, Matt Lauer, is finalizing his divorce with Annette Roque. The settlement is rumored to involve him paying his wife up to $20 million. The details of the property division however is unknown, but is a reminder that divorce property division laws in Florida recently changed in a big way.

Property Division

Good Morning Property Divisions

According to People, the couple, who wed 20 years ago in 1998, has agreed to share custody of their children. He is rumored to have a lot of guilt and wants to make sure Annette is taken care of.

Reportedly:

They seem happier and their family and friends are thrilled to see they are both moving forward.”

Left unsaid in the article is what happens to the $7 million coop in New York City, the Hamptons beachfront estate he bought for $36 million from actor Richard Gere, his Sag Harbor home, and other properties.

Florida Property Division . . . and Friends

I’ve written about property division 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 non-marital assets and debts, and then distribute the marital assets and debts between the parties.

Marital assets and liabilities include, in part, assets acquired and liabilities incurred during the marriage, individually by either spouse or jointly by them.

Passive Appreciation and Morning Joe

Passive appreciation of a nonmarital asset may also be a marital asset the court must equitably distribute. For example, Lauer bought his upper East Side apartment for roughly $6 million, but has it listed for over $7 million.

In 2010, the Florida Supreme Court held that “passive appreciation of a nonmarital asset … is properly considered a marital asset where marital funds or the efforts of either party contributed to the appreciation.”

The Florida Supreme Court created a formula for courts to use in determining the value of the passive appreciation of nonmarital real property for equitable distribution.

But the formula was flawed because there is no relationship between the amount of marital funds used to pay down a mortgage during a marriage, and the passive appreciation of the property.

Also, the case requires a nonowner spouse to have made contributions to the property as a prerequisite to sharing in the passive appreciation of the property.

Live with Kaaa

Recently, Governor Scott signed a bill to fix the problem. The bill amends our equitable distribution statute and establishes a statutory formula for courts to use.

The new statutory formula does not require the nonowner spouse to have made contributions to the property, and also bars the marital portion of nonmarital real property from exceeding the total net equity of the property on the valuation date in the divorce action.

The People article is available here.

 

Do You Have to Split Premarital Assets?

Posted by admin on

On behalf of Ronald H. Kauffman, P.A. posted in Equitable Distribution on Wednesday, April 2, 2014.

In divorced, marital property is equitably distributed, but non-marital assets – things acquired before the marriage for instance – are not. However, there is a little-known exception when the value of non-marital assets appreciates. For Harold Hamm, the billionaire founder of oil company Continental Resources, that little exception is a big headache.

Hamm ranks #68 on Forbes’ list of Global Billionaires with a net worth estimated at $14.6 billion. The Oklahoma judge presiding over Hamm’s divorce has recently ruled that he will not have to give up his controlling interest in the company because his 122 million shares are pre-marital.

However, the judge also ruled that the value of the pre-marital stock’s appreciation during the 26-year marriage may still be divided as a marital asset.

The court is essentially saying he won’t have to divide his shares. But, the court still has a duty to make an equitable distribution of what we call: enhanced value.

If the increase in value is attributable to marital effort by either party to make it grow, as opposed to market conditions, then the increase may be considered a marital asset and divisible by the court.

In the trial, the judge will determine how much of Continental Resources’s gains were due to market conditions and how much to Harold Hamm’s efforts. Gains credited to the market probably wouldn’t be included among divisible assets.

Given the size of the fortune and the lack of pre-nuptial and post-nuptial agreements, it’s possible this divorce could become one of the largest publicly known divorces.

For more information on the Hamm divorce, click here.