Property Division and Divisible Assets
Video Transcribed: So let’s talk a little bit about what business goodwill is. My name is Brian L. Jackson. I’m an Oklahoma Fathers Rights lawyer here with Dads.Law. I want to talk today about a property division topic that comes up from time to time in divorces and that is the goodwill of businesses. What is it and how is it divided and when is it divided?
So goodwill can be loosely defined as the idea of the profit made above and beyond what the normal value of the good or service that you’re selling is. It’s what brings people in your door as opposed to your competitor. Sometimes goodwill can be considered a divisible asset of a business. Sometimes it is not. It largely depends on the source of the goodwill. Is it related to the business or is it related to a particular individual in his or her reputation?
Case law on this topic will differentiate between the goodwill of a business and the reputational goodwill of a particular individual. Business goodwill is a divisible asset. For example, you own a retail store that has a really good reputation in town. Everybody likes it. If that reputation for that store would be something that could be transferred. If it’s not attached to an individual in the store, and it probably isn’t, then that could be considered a divisible asset.
Now, to give you a counter-example, let’s say you’re talking about, well, I’ll use my own profession as an example, a law practice. The law practice is lucrative, but law practice is lucrative because the attorney who owns the law practice is a good attorney and is he’s known to do a good job that would be reputational. It would be individual to that attorney. If he or she sells the practice. The value of that goodwill doesn’t transfer with the sale, because that’s attached to that specific attorney.
So that gives you a loose idea of the difference and that type of goodwill is not divisible. It’s attached to that person. Since you can’t very well take the person and proverbially chop them in half, there’s no way for a court to divide that, and the case law’s pretty clear. That’s not divisible.
Now if you happen to have a business and you are looking at a potential divorce, you definitely need a good experienced attorney to help you out. One place you can find a good Tulsa property assets division attorney is Dads.Law, where fathers are not disposable.