I'm divorcing my husband of 24 years and my question is as follows. Husband owns 10% of a privately held S corporation with one other owner holding the remaining shares, It was a startup company some 25 years ago and my husband and I both built this business to were it stands today. I was let go after 18 years of service, but my husband is still employed. What I would like to know is can I include my husbands shares as part of the equitable distribution in my divorce, and have the business appraised to determine my husbands actual stock value.
The short answer is: yes. Even if the shares are only held in your husband's name, it is subject to equitable distribution if acquired during the marriage with marital funds and/or marital labor.
However, valuing the shares may be more problematic. First, there is the aspect as to whether the value of your husband's shares of the business are part of his personal goodwill (and then not included in the marital estate) or whether they are part of "enterprise goodwill" in which case they have value as part of the marital estate. Then the second hurdle you have is that since your husband is only a minority shareholder of a closely held business, these shares are not really marketable (who wants to own a minority interest and essentially have no "say" in how things are run?) and therefore, any value attributed to them would be significantly discounted.
Sound a little complicated? It is, and typically we get a business valuation and/or forensic accountant in these cases. You should probably seek this advice to make sure you are going down the right path.
Best of luck,
Cindy S. Vova
Law Office of Cindy S. Vova, P.A.
8551 West Sunrise Blvd., Suite 301
Plantation, FL 33322
info@vovalaw.com
954-316-3496
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