## Facts

- Frances W. Bowen and James H. Bowen married in 1955, had four children, and separated in 1979.
- Frances worked during the early marriage and helped support James while he completed engineering school.
- James later acquired a 22% minority interest in Polycel Corporation, a closely held plastics manufacturer he helped form in 1973, and became a full-time employee in 1976.
- At divorce trial, the principal marital assets were the marital home and James’s Polycel stock.
- Expert valuations of the Polycel interest varied widely, from about $70,854 to about $338,279.
- Polycel shareholders had a buy-sell agreement, but the trial court declined to treat it as determinative because it was outdated, omitted goodwill/intangibles, and was designed for sale or death rather than divorce.
- Finding market valuation “conjecture,” the trial court ordered equal division of marital assets but used a special remedy: James retained legal title to all shares, while Frances received an ongoing “equitable one-half interest” in the stock, including rights to half of dividends and sale proceeds, and the judgment imposed restrictions intended to protect her interest.
- James appealed the distribution method.

## Issues

1. Whether, in equitable distribution, a court may avoid fixing a present value of a spouse’s minority interest in a closely held corporation by awarding the non-owner spouse a continuing “equitable one-half interest” in the stock’s future dividends and sale proceeds while leaving legal ownership with the shareholder spouse.

## Decision

- The Supreme Court of New Jersey reversed and remanded.
- The Court held that equitable distribution may not be accomplished by creating a continuing equitable ownership interest in a closely held corporation for the non-shareholder spouse.
- The trial court must determine a reasonable present value of the stock interest, despite valuation uncertainty, and effect distribution through conventional means (property allocation or a monetary distributive award).

## Legal Principles

- Equitable distribution requires identification, valuation, and distribution of marital assets; valuation may be imprecise, but courts must make the best present-value determination the evidence permits.
- A court should not restructure corporate ownership or create new, ongoing interests in a closely held corporation that were not contemplated by shareholders and corporate arrangements.
- Distribution methods should avoid long-term post-divorce financial entanglement and should not impose ongoing dependency on the owner-spouse’s future business decisions.
- Buy-sell agreements are relevant evidence of value in closely held corporations but are not necessarily conclusive in divorce; they should be weighed with other financial evidence, including goodwill and earnings.

## Conclusion

The court rejected an equitable-distribution scheme that granted the non-owner spouse a continuing equitable stake in a closely held corporation and required a present-value valuation and a conventional distributive award to divide the marital value without creating an ongoing corporate interest.


Bowen v. Bowen, 473 A.2d 73 (N.J. 1984)