A Georgia court can divide a business or professional practice once the judge or jury decides how much of it is marital and what it is worth.
How Much of It Is Marital
In Wright v. Wright, 277 Ga. 133 (2003), a husband started a family business during the marriage with his inheritance, and the Georgia Supreme Court agreed that only its growth from the spouses’ efforts could be divided. Our posts on marital property and asset values explain the rules and the proof.
How It Is Valued
In Miller v. Miller, 288 Ga. 274 (2010), the wife’s expert, a forensic accountant, valued the husband’s medical practice at $331,214, combining the asset, market and income approaches. The trial court accepted it, and the Supreme Court affirmed: the choice among methods was the trial court’s.
Miller also held that enterprise goodwill, the value that would pass to a buyer, is part of a practice’s marital value. It left open whether personal goodwill is too, assuming for that appeal only that it is not, since the expert had excluded it.
Nor does an owners’ buy-sell price control. In Barton v. Barton, 281 Ga. 565 (2007), a shareholder agreement’s formula would have valued the husband’s half of a closely held company at $342,200. An arbitrator, whose award the superior court adopted, valued it at $508,000, and the Supreme Court affirmed, explaining that a buy-sell price “can be manipulated and does not necessarily reflect true market value.”
How It Is Divided
A court can let the owner keep the business and pay out the other spouse’s share. In Miller, the wife received a fourth of the practice’s value, $82,803.50, in 24 monthly payments the trial court called “business alimony.” The label did not control: fixed payments with no contingencies made the award “in the nature of an authorized property settlement,” as our post on alimony, equitable division and property settlements explains.
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This post is a quick overview of the law and is not intended as legal advice. Please feel free to contact our office for a consultation if you have questions about this or any other legal aspects regarding your case!