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Goodwill Must be Valued and Divided

In Golden v. Golden, husband started a medical practice during marriage, which therefore, made the practice a community asset.  The divorce court awarded husband the practice and ordered husband to pay wife one-half of the practice’s goodwill.  On appeal, husband’s divorce lawyer argued no goodwill existed because the practice depended entirely on husband’s own reputation.

The Second District Court of Appeal agreed with wife’s divorce attorney and affirmed the divorce court’s order because, “the practice of the sole practitioner husband will continue, with the same intangible value as it had during the marriage.”  “Under the principles of community property law, the wife, by virtue of her position of wife, made to that value the same contribution as does a wife to any of the husband’s earnings and accumulations during marriage. She is as much entitled to be recompensed for that contribution as if it were represented by the increased value of stock in a family business.”  Consequently, when goodwill exists, the divorce court must value and divide the goodwill under community property principles.

Golden v. Golden (1969) 270 Cal. App. 2d 401