In divorce cases, it may be necessary to carve up goodwill because, in many jurisdictions, enterprise goodwill is marital property, but personal goodwill is not. However, overall goodwill should be viewed as having three parts, not two, as per the traditional definition. Personal goodwill can be allocated into two components: (1) transferrable (salable) personal goodwill; and (2) “pure” personal goodwill. In a Wisconsin case, the court broke new ground in divorce law when it held that all the salable personal goodwill in a professional practice (as evidenced by a noncompete agreement) is a divisible marital asset. The case is McReath v. McReath, 2011 WL 2706249 (July 12, 2011), which is available at BVLaw.
Get up-to-date on goodwill issues in divorce in the session, Let’s Get Personal: Enterprise vs. Personal Goodwill, with Joy Feinberg (Boyle Feinberg PC) and Michelle Gallagher (Adamy Valuation) at the National Divorce Conference in Las Vegas May 8-10. Presented by BVR and the American Academy of Matrimonial Lawyers (AAML), the conference will bring together the leading matrimonial attorneys and financial and valuation experts. Don’t miss it!
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