Yoon v. Yoon,
711 N.E.2d 1265


Facts: Sunsook (Yoon) Nam (P) claimed the goodwill in Jay Yoon's (D) medical practice as marital property. The trial court found goodwill in the practice attributable both to the medical practice and to D personally, holding it was marital property. D appeals.

Issue: If goodwill is personal to the professional business, owner is that goodwill divisible on marriage dissolution? Before including the goodwill of a self-employed business or professional practice in a marital estate, must a court determine that the goodwill is attributable to the business as opposed to the owner as an individual?

Holding: Yes. Grant transfer and remand.
Court held that: (1) goodwill of business based on personal attributes of individual is excluded from marital estate for purposes of valuation upon dissolution of marriage, and (2) property division improperly included value of husband's medical practice attributable to husband's future earning capacity.

Analysis: Appellant challenged the court of appeals' affirmance of the trial court's division of marital property. Appellant contended that the division erroneously counted his future earning capacity both as goodwill in the value of his medical practice and again to justify unequal division of marital property. The court affirmed the court of appeals' decision, but remanded for determination of the value of appellant's practice in excess of the value attributable to his personal goodwill. The court distinguished enterprise goodwill, which was attributable to the business, from personal goodwill, which was attributable to the owner's personal skill, training, or reputation. The court held that goodwill that was attributable to a business enterprise was divisible property, but to the extent that the goodwill was personal to the professional or business owner, it was a surrogate for the owner's future earning capacity and it was not divisible.