Normally, any property acquired by a spouse during the course of a marriage is considered marital property. That is to say, such property is subject to equitable division between the spouses in the event of a divorce. But there are exceptions to this general rule. For example, any property acquired by either spouse through “inheritance or gift from a third party” is considered the non-marital and separate property of the recipient.

Court of Special Appeals: Husband’s Minority Shares of Family-Owned Businesses Improperly Classified as Marital Property

A recent decision from the Maryland Court of Special Appeals, Kamper v. Kamper, helps to illustrate this particular exception in practice. This divorce case involved a husband and wife who were married for 13 years prior to separating in 2016. They finally divorced in 2019. A key issue in the property division was the husband’s interest in two family businesses, which the trial court concluded were marital property.

To provide some additional background. The two businesses in question were previously owned and operated by the husband’s father. The husband was employed by the businesses. The wife was not. After the husband’s father died in 2017, majority control of the businesses shifted to the husband’s mother.

In 2007, while the parties were still married, the father gifted the husband a minority interest in each of the businesses. The divorce court subsequently held these interests were marital property. The court valued each of the businesses and applied the husband’s minority interest to each in calculating the total value of marital property.

The Court of Special Appeals, however, said the trial court’s actions were legally incorrect. As noted above, the husband acquired his shares of the business via a gift from his father. Gifts to one spouse alone are usually not classified as marital property. The wife therefore had the legal burden to prove otherwise. She failed to do so. Indeed, the appellate court noted the wife’s own testimony at trial only supported the husband’s claim that the business interests were gifts and not marital property.

The Court also observed that even if the interests in the family businesses were marital property, the trial court incorrectly valued said interests. More to the point, the trial court “inferred” the businesses were worth about $1 million each. Neither spouse actually knew what the businesses were worth. At trial, the wife simply guessed “about a million dollars,” and the judge ran with that figure. The Court of Special Appeals pointed out that the appropriate course of action would have been to conduct an appraisal and offer some sort of expert forensic valuation testimony to the judge. But it was unacceptable for the court to rely on the wife’s “opinion” that was “no more than speculation” to value what the judge at the time considered a valuable marital asset.

Contact Prince George’s County Family Law Attorney Robert Castro Today

This article has been provided by the Law Office of Robert Castro. For more information or questions contact our office to speak to an experienced lawyer at (301) 870-1200.

Source:

https://www.courts.state.md.us/sites/default/files/unreported-opinions/1612s19.pdf