delivered the Opinion of the Court.
The parties in this case, Antoinette F. Thornhill (“Wife”) and Chuck Thornhill (“Husband”), separated in September 2005 after twenty-seven years of marriage. The parties’ standard of living increased significantly in the final years of the marriage, in large part due to Husband’s formation of an oil and gas service company, NRG Services, LLC (“NRG”). The magistrate considered the parties’ increased standard of living in finding that Wife was entitled to temporary maintenance. Later, the trial court adopted the magistrate’s award as part of its permanent orders. Additionally, after hearing expert testimony on the appropriateness of a marketability discount, the trial court found enforceable a separation agreement between the parties that valued Husband’s interest in NRG subject to a thirty-three percent marketability discount.
On appeal, the court of appeals reversed the trial court’s award of temporary maintenance.
In re Marriage of Thornhill,
As to the first issue, we hold that trial courts charged with the equitable distribution of marital property under section 14-10-113, C.R.S. (2009), may in their discretion apply marketability discounts when valuing an ownership interest in a closely held corporation. We conclude that the considerations we found compelling in
Pueblo Bancorporation v. Lindoe, Inc.,
Accordingly, we affirm the court of appeals’ holding that there is no per se rule against marketability discounts in the divorce context and hold that it is within the trial court’s discretion to apply a marketability discount when valuing a spouse’s ownership interest in a closely held corporation in a divorce proceeding. We reverse the court of appeals’ holding that the magistrate improperly considered the parties’ standard of living in making the threshold determination of entitlement to temporary maintenance under section 14-10-114(3).
I.
During most of the parties’ twenty-seven year marriage, Husband worked various jobs in the oil and natural gas industries while Wife worked part-time at miscellaneous low wage jobs and cared for the parties’ three children. Wife returned to school in 1995 when the parties’ youngest child was in middle school, ultimately earning a master’s degree in occupational therapy. At the time of the permanent orders hearing, Wife was working in that field and earned a gross income of approximately $4,790.00 per month.
Husband’s earnings increased significantly in the last few years of marriage after he formed his own oil and gas service company, NRG, in 2001. An expert retained by Husband valued his ownership interest in NRG at the time of the parties’ separation to be $1,625 million after applying a thirty-three percent marketability discount. In addition, Husband indicated a total monthly income before expenses of approximately $15,000.
Husband and Wife entered into a separation agreement in February 2006 that was to govern the division of marital property, including the valuation of Husband’s ownership interest in NRG. However, when Wife disavowed the agreement as unfair, the trial judge vacated the “non-contested” hearing and scheduled a permanent orders hearing.
Prior to the permanent orders hearing, Wife requested temporary maintenance and the parties went before a magistrate for a temporary orders hearing in August 2006. Although the magistrate’s findings and orders were somewhat unclear, with initial statements that Wife was “appropriately employed” but could not meet her needs independently followed by a later statement that she “works and meets her needs,” the magistrate ultimately awarded Wife temporary maintenance of $12,000 per month until permanent orders, retroactive to May 2006 when Wife filed her motion requesting temporary orders.
At the permanent orders hearings in March and April of 2007, experts for both Wife and Husband provided valuations of Husband’s ownership interest in NRG. Although the two experts’ initial valuations were within $18,000 of each other, at approximately $2.5 million, significant disparity in the final valuations resulted from the application of a thirty-three percent marketability discount by Husband’s expert. Wife’s expert chose not to apply the marketability discount, citing the rationale of this court’s decision in
Pueblo Bancorporation v. Lindoe, Inc.,
The trial court found the separation agreement — which used a valuation of Husband’s interest in NRG that included the marketability discount — enforceable and entered it as an order of the court. The trial court also adopted the magistrate’s order regarding temporary maintenance. The court of appeals reversed both of these rulings.
In re Marriage of Thornhill,
First, the court of appeals found the separation agreement to be unconscionable and unenforceable, and remanded the case with directions to vacate the property settlement and enter new permanent orders. Noting that the issue could arise on remand,
id.
at 1086,
2
the court of appeals went on to consid
We granted certiorari to consider Wife’s challenges to the court of appeals’ ruling on marketability discounts and its reversal of the temporary maintenance award. We affirm the court’s conclusion that a per se rule against marketability discounts in the divorce context is inappropriate. As the court of appeals properly concluded, trial courts have the discretion to apply such discounts when valuing an ownership interest in a closely held corporation in a divorce proceeding. We reverse the court of appeals’ holding that the magistrate erred by considering the parties’ standard of living in making the threshold determination of entitlement to temporary maintenance under section 14 — 10— 114(3). Instead, we hold that this threshold inquiry contemplates that the trial court will consider the particular circumstances surrounding the marriage, including the parties’ standard of living.
See In re Marriage of Olar,
II.
Wife argues that this court should extend the holding and rationale of
Pueblo,
which prohibits marketability discounts
3
in the context of a corporation buying out a dissenting minority shareholder, to situations involving the valuation of ownership interests in closely held corporations by a trial court charged with equitably dividing marital property in a marriage dissolution case.
See Pueblo,
An extension of
Pueblo
to marriage dissolution cases is inappropriate given that
Pueblo
interpreted specific statutory language that is not present in the marriage dissolution statute. In
Pueblo,
we interpreted the statutory term “fair value” with respect to the value of a dissenter’s shares.
Pueblo,
Wife argues that despite the absence of the “fair value” language in the dissolution statutes, the rationale in
Pueblo
for prohibiting the application of a marketability discount in a shareholder dispute applies equally as well to a valuation within a divorce proceeding. In addition to concluding that the “fair value” language was inconsistent with a marketability discount, we noted in
Pueblo
that not permitting a marketability discount was most consistent with the basic purpose of the dissenters’ rights statute— namely, to ensure that minority shareholders are properly compensated for the involuntary loss of their investment.
Pueblo,
Even if the situation in this case can be similarly characterized as the involuntary cash-out of an ownership interest, it does not necessarily follow that there exists the same need in marriage dissolution proceedings for a per se rule prohibiting marketability discounts.
See Erp v. Erp,
Additionally, unlike in
Pueblo,
there is no clear national trend suggesting that a per se rule against marketability discounts is the majority view when it comes to valuing ownership interests in closely held corporations in divorce proceedings.
See Pueblo,
We agree with these courts that the decision of whether to apply a marketability discount in the valuation of an ownership interest in a closely held corporation during divorce proceedings is best left to the discretion of the trial court. Whereas in
Pueblo,
we rejected a case-by-case approach to “fair value” appraisals in shareholder disputes as “untenable,” here, we find it to be precisely the approach that is contemplated by the language of the marriage dissolution statute. In
Pueblo,
we noted that a case-by-ease approach would introduce too much uncertainty and thus work against the purpose of the dissenters’ right statute of providing incentives against and a remedy for the unfair treatment of a minority shareholder by the majority shareholders.
Pueblo,
For the foregoing reasons, we decline to adopt the per se rule against marketability discounts advocated by Wife. Instead, we hold that trial courts may, in their discretion, choose to apply a marketability discount when valuing a spouse’s ownership interest in a closely held corporation in a marriage dissolution proceeding.
III.
Wife also argues that the court of appeals erred in overturning the trial court’s order upholding the magistrate’s decision to award her temporary maintenance. The court of appeals provided two distinct reasons for such a reversal: first, the magistrate made findings that were contradictory, and second, the magistrate appeared to have considered the parties’ standard of living when determining whether Wife met the statutory threshold for temporary maintenance.
In re Marriage of Thornhill,
Under this two-part analysis, the trial court first evaluates a spouse’s entitlement to maintenance by determining whether the spouse meets a two-pronged threshold test. This two-pronged test requires the court to find that the spouse:
(a) Lacks sufficient property, including marital property apportioned to him or her, to provide for his or her reasonable needs; and
(b) Is unable to support himself or herself through appropriate employment or is the custodian of a child whose condition or circumstances make it appropriate that the custodian not be required to seek employment outside the home.
§ 14-10-114(3). Under this test, a trial court making a threshold entitlement-to-maintenance determination must first consider what constitutes the “reasonable needs” of the spouse seeking maintenance, and then consider whether that spouse possesses sufficient property or can obtain “appropriate employment” to meet those needs. If the trial court determines that the spouse is entitled to maintenance, it then considers “all relevant factors,” including, among other things, “[t]he standard of living established during marriage,” in setting the appropriate amount of temporary maintenance. § 14-10-114(4);
see also In re Marriage of Olar,
The court of appeals held that the magistrate in this case erred in considering whether Wife could “maintain her lifestyle” as part of the threshold entitlement determination, finding that such a consideration is only relevant to determining the amount of temporary maintenance to be awarded.
In re Marriage of Thornhill,
Our decision in
In re Maniage of Olar
is instructive here. In that case, the trial court denied maintenance on the ground that “reasonable needs” and “unable to support [oneself] through appropriate employment” was “a high threshold requiring a spouse to establish that he or she lacks the minimum resources to sustain human life.”
In re Marriage of Olar,
The court of appeals was correct, however, in its observation that the magistrate’s findings seem contradictory on the threshold issue. For example, at first the magistrate concluded that Wife “works and meets her needs,” but later concluded that she did not, and issued a temporary maintenance award in the amount of $12,000 per month. When read in context, however, the magistrate’s initial statement that Wife was appropriately employed appears to refer to the fact that her current employment was appropriate in the sense that it was commensurate with her level of education and experience. However, later it is clear that the magistrate determined that Wife would not be able to support herself given the standard of living that she experienced during the marriage, despite her current employment. We therefore find that the magistrate properly considered the parties’ standard of living during the marriage when it found that Wife was entitled to an award of temporary maintenance, and reverse the court of appeals’ determination to the contrary. We express no opinion on the issues the court of appeals did not reach, including Husband’s challenge to the amount of the award, and Wife’s claim that Husband should have been required to pay the arrear-age of maintenance payments.
In re Marriage of Thornhill,
IV.
We affirm the court of appeals’ holding that there is no per se rule against marketability discounts in the divorce context and hold that it is within the trial court’s discretion to apply a marketability discount when valuing a spouse’s ownership interest in a closely held corporation in a divorce proceeding. We reverse the court of appeals’ holding that the magistrate improperly considered the parties’ standard of living in making the threshold determination of entitlement to temporary maintenance under section 14-10-114(3). Accordingly, we remand this case for further proceedings consistent with this opinion.
Notes
. We do not consider the court of appeals' conclusion that the separation agreement was unconscionable. We granted certiorari on the following two issues:
(1) Whether the appellate court erred by refusing to extend the holding of Pueblo Bancorpomtion v. Lindoe, Inc.,63 P.3d 353 (Colo.2003), to divorce proceedings, thereby allowing the application of a marketability discount in valuing a closely held corporation operated as a going concern at the time of the parties' divorce proceeding.
(2) Whether the court of appeals erred by reversing the district court’s ruling, which upheld the magistrate’s temporary maintenance award to wife, when it failed to consider the particular facts and circumstances of the parties' marriage within section 14-10-113(3)'s threshold requirements of "reasonable needs” and "appropriate employment.”
. Later in the opinion, the court of appeals states that the trial court in this instance did not abuse its discretion in applying a marketability discount.
In re Marriage of Thornhill,
. A marketability discount "adjusts the value of specific shares to reflect the fact that there is no ready trading market for the shares.”
Pueblo,
. See § 14 — 10—113(l)(b) (relevant factors include the value of the property set apart to each spouse); § 14-10-113(l)(d) (relevant factors in-elude changes in value of separate property during the marriage); § 14-10-113(5) (directing that property be valued as of the date of decree).