Illinois Divorce: Valuation of Marital Assets. Real Estate Is Not Always Real Estate in Divorce. The Husband's First Lawyer Made a Serious Mistake and Overvalues the Husbands Marital Interest in a $3,550,000 Chicago Commercial Building.
At the divorce trial, the Wife's divorce lawyer claimed that the Husband had a 25% interest in a commercial building in Chicago. She obtained a Real estate appraisal to back up her claim of $3,550,000. Husbands 25% marital interest, she says is worth: $877,550.
She argues that the marital portion of the commercial Real estate is worth $877,550 and demands half of the Husband's interest as her share of this marital property in their divorce. The Husband's lawyer did not dispute the Wife's claim of marital value of this asset.
The Husband interviews with Martoccio & Martoccio and asks if there's anything we can do to help. We review the case and tell him there is a way.
The Husband hires Martoccio & Martoccio. After investigation we determine that the Husband does not own a 25% interest in a commercial building at all. Instead we determine the Husband owns a 25% interest in an LLC. In re Marriage of Losioski
The commercial building it turns out is owned by a Limited Liability Company or LLC. Quite a different thing than owning real estate.
We completely reevaluate the case, and discovery that the Husband's former lawyer made a serious error.
As a minority owner of an LLC rather than an owner of real estate the Husbands 25% interest of $877,550 marital must valued after it has been discounted and reduced.
We hire a forensic accountant as the Husbands Divorce Expert to reevaluate the Marital value of his interest. This forensic expert testifies at the divorce trial that the Wife is wrong. The marital interest of $877,500 she calculated as the fair market value of the real estate is totally incorrect. Since the real estate is owned by an LLC. The value of the marital interest must be reduced by a discount factor due to lack of marketability. Lack of marketability means that the Husband cannot sell his LLC interest on the open market the way he could sell common shares of stock. Our Forensic accountant expert also testifies there should be a discount for Husbands owning only a minority interest. In other words, he can be out voted on every issue by the owner of the majority interest and therefore has no say so in the business.
Martoccio & Martoccio's expert determines that the Husbands $877,500 marital interest is in reality worth only $97,000. The divorce judge therefore awards the Wife part of $97,000 as her interest rather than part of $877,500 as her part interest.
By correctly analyzing the case and using an expert forensic witness at trial, one of Martoccio & Martoccio's divorce experts we stopped the Wife from over evaluating a marital asset in her favor at divorce. Our client was needless to say very happy indeed with the outcome. In re Marriage of Losiowski.