Opinion ID: 1167551
Heading Depth: 4
Heading Rank: 1

Heading: Marketability of Robert's Professional Goodwill.

Text: The goodwill of a professional corporation is property which may be includable in the marital estate in a divorce proceeding. See Rostel v. Rostel, 622 P.2d 429, 430-31 (Alaska 1981). In Rostel we held that income earning capacity attributable solely to the expertise, talents and personality of one spouse is property subject to division by the court. Id. No distinction was made between marketable and unmarketable goodwill. Id. We narrowed our position on professional goodwill in Moffitt, 749 P.2d at 347. There we held that only marketable goodwill was to be included in the marital estate. Id. The court chose this approach because to award the value of an unmarketable asset to an ex-spouse might restrict the liberty of the spouse who possesses that asset. Id. at n. 3. In order that an ex-spouse's liberty not be restricted, this court will not divide goodwill that cannot be sold. Id. Robert contends that his law practice has no marketable professional goodwill, and that the trial court erred by including his professional goodwill in the marital estate. We continue to adhere to the view we expressed in Moffitt and conclude that Robert is correct. In Moffitt, we articulated a two-part test for assessing the divisibility of professional goodwill. Moffitt, 749 P.2d at 347. The trial court must first determine if goodwill exists. Id. If the trial court determines that goodwill exists, it then must determine whether the good will could actually be sold to a prospective buyer. Id. If the trial court determines either that no good will exists or that the good will is unmarketable, then no value for good will should be considered in dividing marital assets. [2] Id. We express no opinion regarding the marketability of a multi-lawyer law firm's professional goodwill. [3] It may be that marketable professional goodwill exists in a multi-lawyer firm, for example, upon evidence of sales or purchases of partnership interests. In this case it is clear that Robert's goodwill is unmarketable. The uncontroverted evidence established that his law practice's goodwill could not be sold. [4] We conclude that Robert has no marketable professional goodwill in his law practice, and that the trial court erred by including his professional goodwill in the marital estate.