Columbus Ohio Family Law Attorneys

Law Offices of Virginia C. Cornwell

(614) 225-9316
Subscribe to the RSS Feed

Franklin County Ohio Divorce Attorney series on Divorce part 14: Interstate Divorce

This is the 14th installment in a series by a Franklin County Ohio Family Law Attorney about the process and options for ending your marriage in Ohio, and about Ohio divorce laws.

OHIO INTERSTATE DIVORCE

This article discusses Interstate Divorce between two parties who do NOT have children.  Interstate child custody jurisdiction and interstate child support jurisdiction will be talked about in other installments in the series.

Suppose two parties live in different states, and one or both of them, has decided that the marriage should end.  So where do they file?  Part 11 of this series, Part 11: Columbus Ohio Divorce Jurisdiction, talked about Ohio’s jurisdiction to end the marriage ONLY.  What about when when a husband or wife wants Ohio to enter orders about the other spouse’s money or property?  For a court to order someone to pay money, or make orders about dividing his or her property with their spouse, the court must have personal jurisdiction.  Here’s the catch: a state that has in rem jurisdiction over the marriage because one of the parties lives in the state can end the marriage, but a court cannot order somebody to pay money unless the court has personal jurisdiction over the person who will be paying money.

CALL NOW  at (614) 225-9316

Personal jurisdiction for divorce purposes is about how much contact a person has with a state, in this case, Ohio.

To make things less confusing, I’ll use “spouse 1” and “spouse 2″These things are NOT enough to give Ohio personal jurisdiction over  spouse 2 in a divorce case with no children:

  • Spouse 2 owns property in Ohio, but has no other contact with Ohio.
  • Spouse 1 lives in Ohio.  Spouse 2 has visited Ohio, but has never established a residence or business here and was not served with court papers while here.
  • Spouse 1 has put some bills into Spouse 2’s name and had them mailed to Ohio, but Spouse 2 does not live in Ohio.
  • Spouse 1 and Spouse 2 got married in Ohio, but Spouse 2 has not lived in Ohio during the last six months.
  • Spouse 1 and Spouse 2 had a long distance relationship and a long distance marriage.  They got married in Ohio but Spouse 2 has never lived in Ohio, only visited.

CALL NOW  at (614) 225-9316

These situations ARE enough to give Ohio personal jurisdiction over spouse 2 (to order money payments such as alimony), and in rem jurisdiction to end the marriage:

  • Spouse 2 has lived in Ohio for the last six months
  • Spouse 1 and Spouse 2 had a long distance relationship and a long distance marriage.  Spouse 2 lived in Ohio during the last six months.  The parties got married in Maryland.
  • Spouse 1 lives in Ohio and Spouse 2 lives in West Virginia.  Spouse 2 went to Ohio to deliver some belongings to Spouse 1, and while Spouse 2 was in Ohio, Spouse 2 was served with a summons and complaint by a process server or sheriff.
  • Spouse 1 files a divorce in Ohio.  Spouse 2 lives in North Carolina, has never lived in Ohio, but is properly served in North Carolina with Spouse 1’s Summons and Complaint for Divorce.  Spouse 2 ignores the documents because Ohio does not have personal jurisdiction.  Therefore, the legal defense of lack of personal jurisdiction is not raised, and is forever waived.
  • Spouse 1 files a divorce in Ohio.  Spouse 2 lives in Florida, has never lived in Ohio, but is properly served in Florida with Spouse 1’s Summons and Complaint for Divorce.  Spouse 2 hires an Ohio attorney to raise the defense of lack of personal jurisdiction.  Unfortunately, that attorney files a general Notice of Appearance, which does not raise the personal jurisdiction challenge.  Personal Jurisdiction is waived and the divorce proceeds in Ohio.

CALL NOW  at (614) 225-9316

In summary, if you are going to want the court to order Spouse 2 to pay money, you must file in the state that has personal jurisdiction over Spouse 2.  Even if Spouse 2 makes a mistake and files the wrong paper, plan to spend some time and money in court arguing over whether they had their shot and they blew it.  Rather than go that route, it’s best to file in the state that has the proper jurisdiction in the first place.

You may also find some of these articles in our divorce series to be of interest:

In addition to the other installments in the Divorce in Ohio Series (see links at top of the page), you may also find the following topics, which relate to divorce, to be helpful.

DISCLAIMER – Read it, it’s stuff you need to know!


Subscribe to the RSS Feed

Divorce in Ohio Series Part 12: Unique Aspects of Professional Practice Valuations in Divorce

Unique Aspects of Professional Practice Valuations in Divorce

By: Heather Deskins, CPA/ABV/CFF, CFE, CVA

Managing Member of P.D. Eye Forensics, LLC

Valuing a professional practice in a divorce setting has its own set of issues.  These issues include understanding the characteristics of a professional practice, the special financial statement adjustments to consider and issues in valuing goodwill.  Of course, each industry is different and there are certainly additional issues that can be addressed; however, this article will focus on several major valuation issues.

What makes a Professional Practice Unique?

Professional practices, such as medical, dental, accounting, legal, and architectural/engineering firms, have certain characteristics that distinguish them from other small businesses and make them unique:

CALL NOW  at (614) 225-9316

  1. They involve providing a service versus a product.
  2. There is a level of trust and respect between the professional and the client.
  3. The professional often relies on referrals to obtain business.
  4. A specific educational degree is usually required by the professions regulatory body.
  5. The professional holds a license from a governmental or regulatory agency and/or is certified by a professional organization.
  6. Successful professional practices typically have a high intangible value and a low tangible value.

CALL NOW  at (614) 225-9316

Valuing a professional practice is far different than valuing, say a manufacturing business.  Since professional practices focus on selling a service, they typically have little value in actual tangible assets (i.e., inventory, machinery & equipment) but have greater value and dependence on their earning capacity.  Some important factors to consider in valuing a professional practice include the following:

CALL NOW  at (614) 225-9316

  • Location: Is the practice located in an urban, high growth area or in a rural, declining market?
  • Referral sources: Is there a large referral base or is the practice reliant on one or a few referral sources?
  • Reputation: What is the professional’s reputation?
  • Age of Professional: Is the professional young and energetic or on the verge of retirement?
  • Employees: Are they dedicated and trained or on the verge of leaving?
  • Work habits: Does the practitioner delegate staff and, as a result,  have a light work load ?  Does the practitioner work excessively?

CALL NOW  at (614) 225-9316

In addition to reviewing these and other non-financial issues, various financial issues need to be addressed that also impact the fair market value of a professional practice.  Fair market value is defined as follows:

The price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, and both parties have reasonable knowledge of the relevant facts.[i]

CALL NOW  at (614) 225-9316

The financial issues include adjusting the financial statements to market values (versus recorded book values) and valuing the goodwill of the practice.

Normalizing Adjustments

Normalizing adjustments are made to the income statement and balance sheet to bring the financial statements to an economic reality.  Typically, a professional practice prepares its financial statements on the cash-basis, meaning that whenever cash is received or paid out, it is then recorded on the books.  Therefore, cash-basis financial statements may not include accounts receivable, accounts payable, accrued vacation pay or accrued taxes on the balance sheet.  To bring the balance sheet to a more economic reality or to true market values, these types of accounts should be included.

CALL NOW  at (614) 225-9316

Balance Sheet

Determining the accounts receivable in a medical practice can be somewhat challenging because the amount the medical practice bills is not necessarily what they expect to be paid.  This is because the medical practice bills their normal rates to the patient’s insurance provider and the insurance provider has a predetermined amount they will pay for services.  When the medical practice receives payment from the insurance provider for services, the medical practice writes-off the difference as uncollectible.   Therefore, the normalizing adjustment to accounts receivable should only included the amount that is determined to be collectible, which can be a challenging process.

CALL NOW  at (614) 225-9316

A specific normalizing adjustment specific to practices that bill by the hour, like accountants and lawyers, is their work-in-process (WIP) or unbilled accounts receivable.  This is considered an asset of the practice and should be considered.  The value of WIP may be an estimate as it is difficult to determine the exact amount of WIP on a particular valuation date; however, it is important to understand the practice’s billing procedures in estimating the amount.

Office equipment can be a valuable asset for certain professional practices.  A dental practice would have far greater value in equipment than a mental health professional.  Depending on the age and condition of the equipment, it may be necessary to have a professional equipment appraiser value the necessary equipment in order to adjust the value to market levels.

CALL NOW  at (614) 225-9316

In addition to adjusting assets on the balance sheet, liabilities should also be considered.  Any unreported liabilities such as accounts payable, accrued liabilities, long-term liabilities and contingent liabilities, should be included on the balance sheet.

Income Statement

One of the most controversial adjustments made to the income statement is to Owners’ Compensation.  When a business owner has control to set his or her own compensation, the level of compensation paid may not be what the current market is paying.  Reviewing the owners’ responsibilities, education and experience will help determine an adequate market compensation.

CALL NOW  at (614) 225-9316

When valuing a business during a divorce proceeding, it is especially important to be consistent in using the same compensation of the business owner that is used in the business valuation and the compensation used in determining child and/or spousal support.  If a higher income is used in determining spousal support than what is used in valuing the business, the concept of double-dipping has occurred.  This is a topic for another day.

Goodwill

As stated previously, professional practices typically have little value in actual tangible assets (i.e., inventory, machinery & equipment) but have greater value and dependence on their earning capacity, which creates goodwill. Goodwill in a professional practice can be broken down into enterprise (or practice) goodwill or personal (or professional goodwill).

CALL NOW  at (614) 225-9316

Enterprise goodwill is the value of earnings or cash flow directly attributable to attributes of the enterprise that results in earnings from consumers that return because of the enterprise, in earnings from new consumers who seek out the enterprise, and in earnings from referrals made to the enterprise.[ii]

Personal goodwill is the value of earnings or cash flow attributable to attributes of the individual that results in earnings from consumers that return because of the individual, in earnings from new customers who seek out the individual, and in earnings from referrals made to the individual.[iii]

CALL NOW  at (614) 225-9316

Enterprise goodwill is typically transferable upon the sale of the practice, while personal goodwill is typically not transferable.  The question then arises, “is personal goodwill a martial asset?”

In the recent Ohio Appeals court case, Banchefsky v. Banchefsky, 2010 WL 3527578 (Ohio App.) (Sept. 9, 2010)[iv], the business owner sold his dental practice during the divorce and the divorce court limited personal goodwill to the value of the non-compete, which was $15,000 as his separate, non-divisible property.[v]

Heather Deskins CPA/ABV/CFF, CFE, CVA is appearing as a Guest Blogger on our site.  She does not work for the Law Offices of Virginia C. Cornwell, and is not being paid to write this article.

 

[i]Revenue Ruling 59-60.

[ii] Business Valuation Update, Still Hunting: In search of Consistent, Functional Definition for Personal Goodwill, David Wood, CPA/ABV. CVA, CFFA, April 2010.

[iii] Ibid.

[iv] Please note that the author does not provide any legal advice, and the case citation provided in this article is for illustration, general informational, and discussion purposes only.

[v] Business Valuation Update, December 2010.

Other Resources:

Pratt, Shannon P., Robert F Reilly, Robert P. Schweihs. Valuing Small Businesses & Professional Practices. 3rd ed.

New York: McGraw-Hill, 1998

You may also find these articles from our divorce series to be interesting:

You may also find some of these articles in our divorce series to be of interest:

DISCLAIMER – Read it, it’s important!

Subscribe to the RSS Feed

Columbus Ohio Divorce Lawyer on Divorce in Ohio Part 11: Jurisdiction

 

This is the 11th installment in a series by Virginia Cornwell, a Columbus Ohio Divorce Attorney and Ohio State Bar Association Certified Family Relations Specialist.  Virginia is one of approximate 100 attorneys in Ohio to have received this honor.  This article is about the process and options for ending your marriage in Ohio, and about Ohio divorce laws.

OHIO DIVORCE JURISDICTION

Jurisdiction is a complicated issue.  Actually, it’s a whole bunch of issues all jumbled together.  There is personal jurisdiction, subject matter jurisdiction, and then there is in rem jurisdiction.  If that weren’t complicated enough, there’s also a similar issued called venue.   Before you determine Venue, you have to figure out the proper jurisdiction.

CALL NOW  at (614) 225-9316

There are many things that are relevant to where you should file your divorce, such as:

  • Whether one or both spouses live in Ohio, and how long they have lived there?
  • Which Ohio County each spouse lives in, and how long have they lived there?
  • If one or both spouses are are absent from Ohio but still have contacts with Ohio, what is the nature and extent of your contacts?
  • Whether either husband or wife is in the military
  • Whether you have children
  • Whether you want the court to make orders regarding support, real property or personal property, or just to grant a divorce?
  • Do you want a divorce, dissolution, annulment or legal separation?

CALL NOW  at (614) 225-9316

IN REM JURISDICTION FOR OHIO DIVORCE

In Rem is a latin term.  When used in the divorce context, it refers to the court’s jurisdiction over the marital status.  So a court may have in rem jurisdiction to grant a divorce, but no personal jurisdiction over one of the parties, their money and their property, and/or no subject matter jurisdiction over the parties’ children.  In that case, the court could ONLY make orders that the parties are divorced.  Everything else (child support, spousal support, custody, property division, etc.) would remain in as it is, with no orders until somebody files something to get those orders in the proper jurisdiction.

Why would you want to file a divorce in a court that can only end the marriage and not make any orders regarding child support, custody and property?  Actually, there are lots of reasons.

CALL NOW  at (614) 225-9316

  1. The first and most obvious would be that a person wants a divorce and does not know where their spouse is.  If you have LOOKED for your spouse (yes, that means contacting the inlaws if you have their phone number or e-mail), tried several methods to find them and been unsuccessful, you can serve your spouse with divorce papers by publication in the newspaper.  You will have to file an affidavit with the court telling them all the methods you used to try to locate your spouse, and what the results were.  Once publication is completed, this is “good service” but ONLY for ending the marriage.

CALL NOW  at (614) 225-9316

  1. Another reason would be that you and your spouse don’t have any money, property or children to divide, so ending the marriage is the only thing you care about.
  2. A third reason would be that even though you DO have money, property or children with your spouse, you have tried your best to serve your spouse through other methods (mail, sheriff, process server), and you have not been able to do so.  If you are not sure that you have your spouse’s correct address, you MAY be able to serve your spouse by publication and go forward with the divorce.

CALL NOW  at (614) 225-9316

You may also find some of these articles in our divorce series to be of interest:

In addition to the other installments in this Divorce in Ohio Series (see links at top of the page), you may also find the following topics, which relate to divorce, to be helpful.

Adultery, Annulment, Alimony (Spousal Support), Best Interest of the Child, Child Custody, Child Custody Jurisdiction, Child Support (deviation), Child Support (how much), Child Support (how to pay), Child Support (lower), Child Support (myths), Child Support (resources), Child Support (sign up),Contempt, Dissolution, Divorce Basics, Divorce Myths, Foreclosure Mediation, Grandparents, Guardian ad Litem, House, How Long Your Divorce May Last, International Abduction,Legal Separation, Mediation, Moving, Packet of Forms vs. Getting a Lawyer, Prenuptial Agreements (Antenuptial Agreements), Shared Parenting,Temporary Orders, Temporary Orders Affidavits, Where to File for Divorce

DISCLAIMER – Read it, it’s stuff you need to know!

Subscribe to the RSS Feed

Columbus Ohio Divorce Lawyer on Divorce in Ohio Part 10: 10 Dirty Divorce Tricks to Avoid

This is the 10th installment in a series by Virginia Cornwell, a Columbus Ohio Divorce Lawyer and an Ohio State Bar Association Certified Family Relations Specialist.  Virginia is one of approximately 100 attorneys in Ohio to have received this honor.  This series is about the process and options for ending your marriage in Ohio, and about Ohio divorce laws.

Divorce has its share of dirty tricks, maybe more than its share of dirty tricks.  This article is part 2 of our a list of 10 Dirty Divorce Tricks. When we say “dirty”, that’s not a good thing.  Dirty is not meant to be another word for clever.

6.  NOT PAYING THE GUARDIAN AD LITEM.  In every family law case, there is one party who wants a guardian ad litem on the case more than the other.  A guardian ad litem has a lot of influence over the court’s decision regarding custody and visitation, shared parenting, and all matters regarding the children of the marriage.  Usually there is at least one parent who resents the appointment of a Guardian ad Litem.  The Guardian ad LItem does not usually begin his or her work until their initial deposit has been paid.  Many times the person who does not want the guardian ad litem will not pay their court-ordered share of the guardian fees in the hopes that it will make the guardian go away.

CALL NOW  at (614) 225-9316

7.  FIRING YOUR LAWYER RIGHT BEFORE TRIAL AND THEN ASKING FOR A CONTINUANCE.  This is something that courts see a lot and appear to have tired of.  Some courts will allow the continuance, but others will refuse and will tell the person who just fired their law to proceed with trial and call their first witness.

8.  WASTE MONTHS FIGHTING A VALID PRENUPTIAL AGREEMENT, OR SEPARATION AGREEMENT. There’s a couple of apps for that too, but that’s another long detailed article for another day.  People who read list of 10 articles want their info short and sweet.

CALL NOW  at (614) 225-9316

9.  DESTROYING, SELLING, HIDING OR TRANSFERRING PROPERTY. There are apps for that too. Temporary restraining orders, contempt, jail time, financial misconduct, distributive awards, awards of attorney fees,  lump sum spousal support (which can be enforced against retirement accounts), and constructive trusts, to name a few.

10.  FALSE ALLEGATIONS OF DOMESTIC VIOLENCE, CHILD ABUSE OR WORSE. Of all the dirty divorce tricks, this one is particularly loathsome in the eyes of courts.  When the court finds that these allegations have been falsely made, the damage to the accuser’s case is immeasurable.  Thereafter they have little or no credibility with the court.

CALL NOW  at (614) 225-9316

BONUS DIRTY TRICK:  INTERFERING WITH A SPOUSE’S EMPLOYMENT In particularly nasty cases, some spouses take a “scorched earth” policy.  If they can’t have you, they want to ruin EVERYTHING in your life, starting with your livelihood.  If your spouse is under a temporary restraining order not to harass you, this would be something that could lead to a finding of contempt of court.  In addition, if someone loses their job or a promotion because of the actions of their spouse, the most obvious way to address it would be to reduce the child support or spousal support, if any, that was paid for by the former job.

CALL NOW  at (614) 225-9316

You may also find some of these articles in our divorce series to be of interest:

Adultery, Annulment, Alimony (Spousal Support), Best Interest of the Child, Child Custody, Child Custody Jurisdiction, Child Support (deviation), Child Support (how much), Child Support (how to pay), Child Support (lower), Child Support (myths), Child Support (resources), Child Support (sign up),Contempt, Dissolution, Divorce Basics, Divorce Myths, Foreclosure Mediation, Grandparents, Guardian ad Litem, House, How Long Your Divorce May Last, International Abduction,Legal Separation, Mediation, Moving, Packet of Forms vs. Getting a Lawyer, Prenuptial Agreements (Antenuptial Agreements), Shared Parenting,Temporary Orders, Temporary Orders Affidavits, Where to File for Divorce

DISCLAIMER – READ IT, IT’S STUFF YOU NEED TO KNOW.

Subscribe to the RSS Feed

Columbus Ohio Divorce Lawyer on Divorce in Ohio Part 9: 10 Dirty Divorce Tricks to Avoid

This is the 9th installment in a series by Virginia Cornwell, a Columbus Ohio Divorce Attorney and Ohio State Bar Association Certified Family Relations Specialist.  Virginia is one of approximate 100 attorneys in Ohio to have received this honor.  This article is about the process and options for ending your marriage in Ohio, and about Ohio divorce laws.

DIRTY DIVORCE TRICKS

CENTRAL OHIO DIVORCE LAWYERDivorce has its share of dirty tricks, maybe more than its share of dirty tricks.  This article, combined with part 10 of our series will discuss 10 dirty tricks to look out for.  When we say “dirty”, that’s not a good thing.  Dirty is not meant to be another word for clever.

  1. DELAY.  A time honored, passive agressive tactic that is also an expensive tactic when it comes to divorce.  Generally, time is on the side of only one spouse in a family law case.  Usually, the person with the most power over a particular issue benefits from delay.  This person will often go to great lengths to make the divorce last longer.  The reasons are to numerous to count, but topping the list are fear of what the future holds, financial motivations , control issues, prolonging living in the marital residence, unresolved issues about the end of the marriage and avoiding accountability.  Regardless of the reason for delay, multiple court appearances will increase the cost you pay to your lawyer, because you pay them by the hour.

CALL NOW (614) 225-9316

OHIO DIVORCE LAWYER2.  IT’S FREE TO LIE.  IT’S EXPENSIVE TO PROVE THE TRUTH. Sometimes in divorce one spouse will take a “throw it against the wall and see if it sticks” approach to the demise of the marriage, especially when that person has no lawyer.  Lawyers are officers of the court and cannot knowingly submit false information to the court, nor can the lawyer knowingly allow their client to give false testimony.  However, when one party is pro se (presenting their case to the court with no lawyer) that party sometimes believes they are made of teflon – they can say anything they want and there will be no consequence if the statements are false.  You don’t have to seek proof for every allegation your spouse makes.  If your divorce case goes to trial, the Judge or Magistrate listens to the evidence put on by both parties and decides who is the most credible.  But it sure helps to have proof.  You and your lawyer should decide what is worth pursuing and what should be ignored.

CALL NOW (614) 225-9316

COLUMBUS OHIO DIVORCE SPECIALIST LAWYER3.  PARENTAL ALIENATION (OFTEN CALLED “BRAINWASHING”). This is one of the oldest and ugliest of the dirty divorce tricks.  Although parental alienation has not yet made its way into the arena of psychology and psychiatry as an official diagnosis, it happens all the time and courts know it.  This is particularly prevalent when one part wants the divorce and one party is angry about being “left behind”, but parental alienation rears its ugly head for a lot of different reasons.

CALL NOW (614) 225-9316

COLUMBUS OHIO HIGH ASSET DIVORCE LAWYER4.  THE SHELL GAME. In order for each party to receive his or her fair share of the marital property, the parties have to make a full disclosure about the nature and extent of their assets and liabilities.  Sometimes, one party to a divorce, or both, does not exchange the documentation for the other side to determine what is fair.  Sometimes one side in the case sits back and lets the other side do all the work, or at least hopes that they will do all the work.  Fortunately, in Ohio, the trend is turning around and courts are starting to make attorney fee awards for failure to comply with discovery.  However, some people still think that the attorney fee awards they get hit with won’t be worse than sharing the money from whatever they are hiding. There’s an app for that, it’s called Civil Rule 37.  In layman’s terms it says “Okay smarty, you don’t want to tell us what you have, then for trial purposes I’ll put on an order telling YOU what you have to split up, and it’s all marital.”  And where do you suppose the court is going to get that number?  You guessed it, from the spouse that complies with discovery.

CALL NOW (614) 225-9316

DIVORCE LAWYERS5.  TRYING TO CUT OFF ACCESS TO THE MARITAL ASSETS AND FUNDS. Don’t even try to carbon date this one, it’s old.  Really old.  As dirty tricks go, this one’s a fossil, but it still has a sharp edge.  You know why it’s old?  Unfortunately, because a lot of the time it works.  One spouse plans for divorce and leaves the other totally unprepared.  If your spouse was controlling or sneaky during the marriage, that is how they’re going to be during the divorce.  Cutting off access to your assets unfortunately makes it difficult for you to hire a lawyer.  Lawyers have families too, and they can’t sacrifice their family’s well being for yours.  They own a business and can’t keep representing clients who can’t pay them.  What’s the lesson?  Ignorance is not bliss.  Know what you have, where you have it, and if your access to it can be cut off by your spouse at any time.  If your spouse is the breadwinner, and you have no funds or assets under your control, you are at great risk if he or she decides to leave you.

CALL NOW (614) 225-9316

You may also find some of these articles in our divorce series to be of interest:

Adultery, Annulment, Alimony (Spousal Support), Best Interest of the Child, Child Custody, Child Custody Jurisdiction, Child Support (deviation), Child Support (how much), Child Support (how to pay), Child Support (lower), Child Support (myths), Child Support (resources), Child Support (sign up),Contempt, Dissolution, Divorce Basics, Divorce Myths, Foreclosure Mediation, Grandparents, Guardian ad Litem, House, How Long Your Divorce May Last, International Abduction,Legal Separation, Mediation, Moving, Packet of Forms vs. Getting a Lawyer, Prenuptial Agreements (Antenuptial Agreements), Shared Parenting,Temporary Orders, Temporary Orders Affidavits, Where to File for Divorce

DISCLAIMER – READ IT, IT’S STUFF YOU NEED TO KNOW.