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When Equitable Distribution in a Florida Divorce May Apply to the Value of a Stock Purchased Before the Marriage

If you own stock in a business entity and you also play an active role in the operation of that entity, then you probably understand keenly how much the success of the business rises and falls on what you do or fail to do. If you’re the spouse of someone like that and the two of you are getting a divorce, it is important to recognize that the fruits of your spouse’s labor are marital assets, which means that you are entitled to an equitable distribution share of the extent to which the business appreciated in value during the marriage. To find out more about what the law says you are entitled to under equitable distribution, reach to a knowledgeable South Florida divorce lawyer to get the customized answers you need for your specific situation.

R.P. was one of those kinds of people, in that he was a spouse and a stockholder. Entering the marriage, he owned stock in three timber corporations in the U.K. In 2008-09, he left his job at the local airport in Flagler County and began taking a more active role in the corporations, rising to become Chairman of the Board. From 2009 to 2018, the bulk of the family’s income came from funds that the husband received from the timber corporations.

In 2018, R.P.’s wife filed for divorce after 18 years of marriage.

As you can see, a circumstance like this is vastly different than, say, being a Walmart greeter who owns stock in Apple. Apple’s value rises or falls completely independently of anything you do. In this case, the husband’s actions from 2009-18 had a very substantial and very direct impact on the increase in value of the timber corporations.

When that happens, and you are the spouse of the stockholder, you are entitled to a portion of that increased value, even if your spouse purchased all his stock before the marriage. Your objective, in that kind of a divorce case, is to prove that the stock value “appreciated as a result of [your spouse’s] labor.” When you prove that, that permits you to assert successfully that the appreciation in value was a marital asset and subject to equitable distribution in your Florida divorce.

Burdens of Proof for Each Spouse

In doing that, there are a few things you need to know about burdens of proof. The initial burden of proof will be upon you to establish that the increase in the corporations’ value was due to your spouse’s “marital labor.” Once you’ve sufficiently done that, the burden shifts to your spouse to prove that some of that increase actually was not a marital asset. If you meet your burden and your spouse does nothing, then the court may declare 100% of the appreciation to be a marital asset.

You may need the help of a skilled expert witness. An expert economist or accountant can sometimes provide great clarification about the sum that is truly a marital asset. This wife had a qualified expert who “thoroughly explained the various acceptable methods in his profession for valuing a business and why he chose to use the ‘capitalization of earnings’ methodology in this case.”

The courts found the wife’s expert witness and his methodology to be reliable and persuasive. On the other hand, the husband offered no expert testimony at all regarding the value of the corporations. As a result, the trial court accepted the wife’s expert’s conclusions “in all respects and the full $1.24 million of appreciated value was found to be a marital asset subject to equitable distribution.

When you or your spouse is a business owner, your divorce case can be particularly complicated. It needs legal representation from a seasoned professional. Count on the family law attorneys at Stok Kon + Braverman to protect you by providing the diligent, thorough, and effective legal advocacy you need.

Contact us online or by calling (954) 237-1777 to schedule your consultation.

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