Increase in Business Value

Question 1

What are the two case names we need to know for increase in business value during marriage?

Answer 1

Pereira (pay interest on SP)
Van Camp (valuable company)

Question 2

Are earnings of spouse’s business and goodwill of business during marraige CP?

Answer 2

Yes

Question 3

When do Pereira and Van Camp apply?

Answer 3

Only when community labor used to enhance value of a business that’s separate property

AKA only applies when one spouse started a business BEFORE marriage (and that business is SP but spouse is expending community labor on it)

Question 4

What are the two types of ways to measure goodwill?

Answer 4

Market valuation (what willing buyer would pay for it)
Capitalization of excess earnings (based on expectation that spouse continues to reap benefit of CP goodwill in future earnings)

Question 5

Upon divorce, how does court allocate a spouse’s business?

Answer 5

Usually spouse running business gets whole business; the other spouse is compensated for 1/2 the value of the business.