Business Founded During Marriage is Marital … But Not Necessarily All of Its Value is Marital Property Required to Be Divided Between the Spouses

When either spouse starts a business or practice during a marriage, that business is marital property.

If one spouse earns his or her living working in that business or practice, that is the source of the couple’s income.

A Wisconsin dentist-Husband and his Wife were married for twenty years. During the marriage, Husband started his dental practice and Wife stayed home.

The practice is valued at $1 million and Husband is ordered to pay alimony of $16,000 per month.

Husband appeals the trial court’s rulings, asserting that a significant portion of the practice’s value represents goodwill and that that portion is nonmarital and should not be divided between the spouses but retained by Husband.

Husband also asserts that the alimony award double-dips into the cash flow encapsulated into the valuation of the practice.

On appeal, Wisconsin’s intermediate appellate court upheld the trial court’s rulings, finding that marketable goodwill is subject to equitable distribution between spouses.

The appellate court felt that Husband had not fully developed this argument and was not persuasive on this point.

Florida case law applies different terminology (“personal goodwill” versus “enterprise goodwill”) and engages in a different analysis of the facts. This would likely lead to a somewhat different result in a similar case to the one reported.

Read more in this Wisconsin Law Journal article: Commentary: Salable professional goodwill as divisible property.