WA court’s goodwill analysis looks a lot like appreciation analysis

In re Marriage of Vandal, 2017 Wash. App. LEXIS 1459 (June 19, 2017)

A recent Washington state divorce case included a noteworthy discussion of goodwill where the owner spouse’s business arguably was separate property. Divorce experts will notice that the court’s goodwill analysis has much in common with an appreciation analysis.  

The focal point in the case was the husband’s CPA firm, which he had set up before the marriage. The issue was whether the community could claim any interest in the business.

Both the trial and the appeals court found the nonowner spouse indeed had a claim to a portion of the value of the business. One successful theory was that the effort the husband put into the business during the marriage to develop goodwill represented community labor for which the marriage, that is, the nonowner spouse, was entitled to get reimbursed. The courts found no support for the husband’s claim that early in the business he had created systems that enabled the business to run itself.

For more on the courts’ analysis, click here.