What will happen to my stuff in a divorce
The Indiana Court of Appeals issued a decision yesterday dealing with several key divorce issues, including the division of property.
Like most states, Indiana has “no-fault” divorce, meaning that either spouse can bring an end to the marriage, effectively on request, without having to prove that something is wrong in the marriage.
What this means for actual people getting divorced in Indiana can be confusing. If you have no kids and no assets, your divorce will be simple. If you have minor kids, then the divorce order must deal with the care and support of them. If you have assets, then the divorce order should fairly divide them. I say “should” because sometimes people do not do a good job of presenting the facts to the court to permit the court to make a fair determination.
Mark Balicki v. Darcy Balicki is a decision that focuses on the evidence that must be provided to the trial court when the parties to a marriage own an interest in a small business. From personal experience, I tell you that small businesses can create very complicated divorces. The key problem is that many small businesses have no real value, beyond that of the people involved. In business appraisals, we call that concept “personal goodwill” and differentiate it from “enterprise goodwill.” Personal goodwill in a business is really just a measure of future earnings capacity of the owner, and is not, under Indiana law, considered to be an asset subject to division in a divorce.
Enterprise goodwill, on the other hand, is something that exists in the business today (i.e. if you sold it to a third party, they would get the benefit of it), and is subject to division in a divorce. In this case, Mark claimed that the trial court erred in valuing an interest in a small business, claiming that the trial court included personal goodwill in selecting a higher valuation of the business. Trouble the Court found here was that, despite the fact that there were no fewer that 3 valuations of this particular business submitted to the trial court, none of them addressed the value of the personal goodwill. Without coverage of that issue in the evidence, the Court of Appeals could not review the claim of error
The lesson here is pretty clear, but this is not the first time this issue has come up, so the question becomes, why did these parties pay for 3 separate business appraisals (they are pretty expensive), but not have the appraiser calculate a value for personal goodwill?
Indiana’s no-fault divorce scheme does not include the concept of alimony, but there is a provision for spousal maintenance which authorized an order for one spouse to contribute to support the other after the divorce. The circumstances in which this type of an order can issue are very limited, and it is not something that we see very often. In the Balicki case, the issue comes up because the parties have an adult child who is severely disabled, and requires ongoing care. This case covers what a party must show to get an award of “caregiver maintenance,” an order to support a former spouse who is caring for a disabled child.
