In Sullivan v. Sullivan, the court ruled where a husband receives certain shares in a closely held business, the burden was on wife to show its value.
Sarah McCormack, Family Lawyer
“[A] spouse’s interest in a closely-held corporation may be a marital asset subject to equitable division in a divorce; this is so even when the business interest was started as the result of separate pre-marital funds.”
The spouse claiming the marital interest in the appreciation of a separate property asset during a marriage “has the burden to establish the interest’s true market value at the time of marriage and at the time of divorce.”
Where a Husband receives certain shares in a closely held business, for example, the burden was on Wife to demonstrate:
- the value of such shares at the time of the marriage;
- the value of such shares at the time of the divorce; and
- “that any such gain [was] . . . due to spousal effort, either separately or in conjunction with the other spouse.”
In this case, the trial court rejected the Wife’s attempt to value the closely-held shares at the time of the parties’ marriage based upon Husband’s basis in said shares, or his sale of said shares under certain circumstances and at certain times. The appellate court held that the trial court had the authority to reject such valuation techniques, and noted that buy-sell agreements with respect to closely-held shares did not necessarily represent the shares’ true market value.
Sarah McCormack practices family law with the Georgia law firm of Kessler & Solominay.