Divorce From Hell: Is a Family Business Considered Marital Property?

The Haft’s feud all started when Gloria Haft suggested that her husband Herbert, slow down and let her oldest son run the family business.  She wanted him to buy a house in France and attend a few tennis matches at Wimbledon while they were still young enough to enjoy their golden years.  Herbert didn’t like the suggestion.

Gloria and Herbert Haft presided over a $1 billion retailing empire.  They owned Crown Books, Trak Auto and half of Shoppers Food Warehouse.  Prior to Gloria’s suggestion and her decision to file for legal separation, she and Herbert had been married for 45 years and had three children.  During the long  feud their daughter and oldest son sided with Gloria and the youngest son sided with Herbert.

Gloria claimed Herbert was guilty of financial abuse and had threatened to bankrupt her, their son and their daughter.  She also claimed that their arguments often ended in shoving matches and that Herbert had committed adultery.  Gloria claimed she did not realize how bad things were until Herbert showed up a board meeting with a lawyer.  According to Gloria, she begged Herbert not to destroy their family and their businesses.

Herbert demanded that Gloria give up her status as a partner in the family business and accept a lesser position.  When Gloria said no, Herbert used his 57 percent voting stock to vote her and their oldest son off the board of directors.  Herbert then fired his oldest son and gave the stock to his youngest son.  The oldest son filed a breach of contract against Herbert and claimed millions of dollars in compensation for the 16 years he worked for the company.  Herbert’s and Gloria’s daughter and oldest son then sued him and their brother for fraudulently trying to get control of $500 million in the family real estate.

The dispute between the Hafts was eventually resolved through mediation.  The specific terms of the settlement were sealed, however one report indicated that Gloria walked away with $80 million.

Is a family business, like the one owned by the Haft’s, considered marital property?  Assuming the business was started during the marriage and marital assets were used to launch it, the simple answer is yes.  The answer could be more complicated if neither of these things are true or if the parties entered into pre-marital or post-marital agreement that affected the ownership.

 

 

 

Posted in Divorce From Hell.

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