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O'Flaherty Heim Birnbaum Kirchner & Curtis Ltd. > Family Law > Wisconsin Supreme Court to hear professional goodwill case.

Wisconsin Supreme Court to hear professional goodwill case.

In McReath v. McReath, 2010 WI App 101, ___ Wis.2d _____, 789 N.W.2d 89, the court of appeals held that there is no blanket rule prohibiting professional goodwill from being subject to property division.  In this case, Dr. McReath owned an orthodontic practice worth over $1 million.  The tangible assets comprised just over $200,000, and an expert testified at the trial court that the remaining $800,000 value of the business was due to professional goodwill.  The trial court awarded each party one-half of the full value of the business.  Additionally, the trial court held that Dr. McReath must pay Ms. McReath $16,000 per month in maintenance.  On appeal, Dr. McReath argued that since his business was valued after consideration of his income, it is double-counting to award Ms. McReath one-half the value of the business and then also require him to pay maintenance to her based on that income.  The court of appeals disagreed with Dr. McReath’s argument and affirmed the trial court’s ruling.

Wisconsin case law has been inappropriately cited for many years with regard to professional goodwill.  Now that the Wisconsin Supreme Court has granted review of the McReath case, it will hopefully clarify whether professional goodwill is a divisible asset, and whether to divide the asset and then establish a maintenance award based on the income from that asset is double-counting.  Stay tuned for the Wisconsin Supreme Court’s future decision.

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