All but four U.S. state court jurisdictions (Kansas, Mississippi, South Carolina, and Tennessee) hold that the goodwill of a professional practice is marital property in divorce cases. The majority of these (28 states) distinguish between enterprise goodwill (transferable) and personal goodwill (non-transferable/non-divisible). Three states have yet to issue a holding—Alabama, Georgia, and Maine, and the latter just missed an opportunity to decide between the majority/minority rules on classifying professional goodwill. Instead, in Hess v. Hess (decided July 5, 2007), the Supreme Judicial Court of Maine deferred to the discretion of the trial court, which had included unclassified goodwill in the expert valuation and disposition of an investment firm.
For a copy of the case abstract of, click here. The abstract will appear in the next issue of the Business Valuation Update™, and the full-text of the court’s opinion is already available for subscribers of BVLaw™.
Free “Goodwill Hunting” download: We’ve just updated BVR’s state-by-state summary of goodwill decisions, with citations to the lead case in each jurisdiction—including Hess. Go to BVR’s free download page and click on “Goodwill Hunting in Divorce.”
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