Dealing With Your Spouse’s Family Business in Your Maryland Divorce

Family-owned businesses are a staple of the American commercial landscape. Many of these businesses are passed down across multiple generations. Sometimes, though, the family business in question is your spouse’s, not yours. When that happens and you’re divorcing, some or all of that business may be a marital asset subject to equitable distribution. Getting a truly just outcome in that scenario means getting a proper determination of both the business’s status (as marital) and its value. A skilled Maryland divorce lawyer can help go about obtaining that just and appropriate outcome.

A recent example of this kind of divorce case comes to us from Baltimore County. The husband’s parents were successful businesspeople, having run a seafood market and restaurant west of Baltimore since 1963.

The husband and wife married in 2004. In 2005, the husband (“Eric”) and his father (“Bill”) formed a corporation to operate the market and restaurant. Initially, Eric owned 25% of the shares and Bill owned 75%. In January 2006, Bill transferred his shares to Eric and Eric’s sister. That left Eric with 75% ownership and the sister with 25%.

In 2019, Eric’s marriage broke down and divorce proceedings ensued. The husband contended that his ownership interest in the market and restaurant was non-marital property, while the wife argued it was a marital asset. After the trial, the court determined that the husband’s ownership of the restaurant was marital property and the business had a value of $226,000.

In a divorce in Maryland, if a spouse asserts that an asset in dispute was non-marital because it was a gift, that spouse must demonstrate that: (1) the transferor intended the transfer to be a gift, (2) that the gift was actually delivered by the giver, and (3) that the recipient accepted the gift.

Under those standards, the husband had substantial problems. At trial, he presented no documentary evidence proving that the 2006 ownership transfer to him from his father was a gift. On the other side, the wife testified that her husband told her he intended to buy his father’s interest in the business, and the business’s corporate organizational documents said that the husband purchased his initial 25% ownership stake.

When Business Valuation Experts Can Help Your Divorce Case

When your divorce includes a dispute over a business asset, one of the essential battles will probably focus on the business’s value. To this end, the testimony of a highly skilled and very persuasive expert may be crucial to succeeding.

That’s because there are multiple accepted methods for valuing businesses and those methods can generate wildly different results. In this case, the husband had an expert who testified that the business’s book value was less than $0, as its liabilities exceeded its assets. Fortunately for the wife, she also had a business valuation expert. Her expert testified that the best valuation method was market value, and the market value of the business was $226,000. Based on that evidence, the trial court’s ruling on the business’s value was not unreasonable.

Whether the properties at issue in your divorce are a marital residence, a family-owned business, or assets of even larger value, a knowledgeable legal advocate can help you ensure you get what is yours under the law. For the diligent and effective representation your case deserves, reach out to the experienced Maryland family law attorneys at Anthony A. Fatemi, LLC. Contact us today at 301-519-2801 or via our online form to set up your consultation.

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