August 2026
Ritholtz had asked how you divide a private business in a divorce when there is no market price to look up. Kilbane's answer was that you hire a valuation expert and then discover the law has invented its own vocabulary: enterprise goodwill against personal goodwill, and in his home state of Florida a business valued as if the spouse who runs it were absent. The gap between what a buyer once offered for the company and what counts as the marital share can be enormous.
Transcript
Yeah, such a magnificent question. You and I talked about quadros preparing for this conversation. QUADRO is an acronym that stands for qualified domestic relations order. It is a subsequent court order that is used to segregate a retirement plan that's subject to ARISA. ARISA stands for the Employee Retirement in Security Act. But if your spouse is a participate in a government plan, a government plan may not accept a quadro. Then how in the heck do we divide that marital asset? So again, I think it always requires us to take a step back and get a hold of a document called a summary plan description, which sets out the rules and regulations of each retirement account. Barry. We've heard people say all the time the only way to eat an elephant is one bite at a time. And whether it's a retirement account or some other asset, we have to be very intentional and very careful and go with each asset. What is it? Is it a qualified or a non qualified account? How do we divide it? What are the tax consequences? And I know you and I are going to talk about other contingent assets down the road, like carry and restricted stock and so on and so forth, But what's the best way to actually accomplish this on each asset? And then you know, maybe with asset with that asset we say, wait a minute, I don't want to have to deal with my estranged spouse in the future to get my fair share. Isn't there a way that I can, you know, barter this away and get something else that works better for me. So those are all the discussions that are asset by asset level.
That's complicated. Let's talk about something even more complicated. What do you do with I liquid assets private businesses that are not Hey, it's easy to split a portfolio of publicly traded stock. What do you do about a company that is private and one of the spouses is running and how do you put how do you know figure out what it's worth and who gets what?
You and I can look at our brokerage account statement or a retirement account statement and have a pretty good idea what that asset is worth. With an asset that we know that has value but we're not sure what that value is required to hire another professional called the business appraiser or a valuation expert. And the crazy thing about the divorce world, Barry, is it imposes these fantasy rules and regulations that you and I would never have to discuss with a married couple. We talk about enterprise goodwill and personal goodwill when we come to the value of a business. So your firm a valuation expert can say, okay, this firm is worth x you know, million dollars. But in a divorce context, especially my home state of Florida, we have to look at what's the value of Barry's firm without Barry, and the value of Barry's firm without Barry. That's the marital asset in Florida, that's what we have to divide. So a year prior, somebody may have offered to buy the family business for fifteen million dollars. But if you take Barry out of that family business and the value of the office buildings and the furniture and sell and so is a million, then the marital share is five hundred grand And you have a spouse thinking, wait a minute, I'm going to end up with seven and a half million dollars of this asset, but really in maybe half a million dollars, or you know, you can pick any other example. So you need that expert, and then you need to understand how the state dissolution of marriage laws apply to valuing that asset within the context of a divorce.
Really really interesting. What do you tell clients about cash flow planning right after the divorce? Suddenly whatever emergency fund credit, even just a household budget. All that stuff gets thrown out of the window. How do you rebuild that? How do you face that first year of spending reality.
In the context of the divorce negotiations. I try to help my clients and lawyers think about asking for a larger than normal emergency savings fund. We talk about, hey, look, this is how much money you have to spend on a monthly basis. But that first year where this now single person is in charge of their monthly budget, there may be some surprises, and there may be a learning curve and so on and so forth. So I try to really build up that experience, and maybe even if it's not an alimony case, maybe it might be helpful to get the case settled if there can be alimony for a short period of time, to help with that transition and ease somebody in to being responsible for probably the first time in a long time, of managing their own cash flow.
So final question, if you could give one piece of advice to someone starting the divorce process, what's the best decision or even document then improves the outcome for everybody.