Divorce Doesn’t Mean Division of Family Business
I am involved in an equitable distribution and I have a closely held business started by my father, who still owns the majority of the business. Eight years ago, my father gave me 25 percent of the business. I am now separated. What can I expect in my divorce case related to my closely held business? What is the process for valuing it? Can she get any of my stock in the business?
You ask a complex, but very interesting, question. Rest assured that she cannot get any of the actual stock in your business. The stock itself is separate property because it was given to you by your father.
However, there may be a component of marital value if there is active appreciation. There must be growth in the value of your 25 percent for there to be active appreciation. With the recession and the short length of time you have owned your business, there may be no appreciation, which is the first position you should review.
There may be two types of appreciation of separate property: active and passive. Passive appreciation is growth related to inflation and other market forces, as defined in the famous equitable distribution and divorce case involving Bruton Smith and his ex-wife over the Charlotte Motor Speedway and some car dealerships. You will want to build your case around your business growth, if any, being related to forces beyond your control, such as inflation. Passive appreciation of separate property is not divided in a divorce.
Active appreciation of separate property is valued in a divorce and relates to growth related to active participation in the business. You do not say what you do for the business, but if you are the decision maker and the business grows, then the value related to that growth is divided in the divorce either by giving the other spouse more of some other asset, such as the home, or giving the other spouse an offsetting cash award called a distributive award.
How much growth of a separate property business is active and how much is passive is calculated by a business appraiser and presented to the court in the form of expert testimony. The calculation can be quite complex. Your attorney would work with your business valuator to determine the best way to present the value of the active and passive appreciation of your separate property business.
DSS testified at the 50B hearing for the child who was the alleged victim of domestic violence. The father of the child subpoenaed DSS to court, but DSS didn’t have anything and that is the problem. We didn’t even get a DSS hearing to even fight it out. How can we fight the decision?
I would really like to know what DSS said to answer you more fully.
Custody can always be modified on a showing of a substantial change in circumstances affecting the welfare of a child. These can be position changes or negative changes. An example of a positive change might be that an alcoholic parent has been rehabilitated. An example of a negative change might be a parent became a drug addict.
You appear to have options, and your best option probably is to file with the District Court a “Motion to Modify Custody” for purposes of changing the current custody order. You need to discuss “changes of circumstances affecting the welfare of the child” since the order was entered in the case where DSS testified. Essentially, why do things need to change? You have to explain this in your motion. You need to get the assistance of a family lawyer with motion if possible. The court will permit you to do this pro se, meaning without a lawyer, but this is not that easy.
Send your questions on family law and divorce matters to firstname.lastname@example.org, or P.O. Box 9023, Greensboro, NC 27427. Please do not put identifying information in your questions. Note that the answers in “Ask Carolyn” are intended to provide general legal information, and the answers are not specific legal advice for your situation. Also, please note that you are not creating an attorney-client relationship with Carolyn J. Woodruff by writing or having your question answered by “Ask Carolyn...”
BY Carolyn Woodruff
February 6, 2014
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