## Facts

- A divorcing couple disputed custody of their minor son and the valuation of the wife’s solo oral and maxillofacial surgery practice.
- The wife operated a successful sole-proprietor medical practice and earned roughly 90% of the marital income; the husband worked salaried jobs and provided limited administrative help to the practice.
- The parties accumulated a marital estate exceeding $4 million, including the practice, which the family court valued at $669,075 based largely on expert testimony.
- After an eight-day trial, the family court awarded sole custody to the husband, set child support, and divided the marital estate approximately 50–50.
- The intermediate appellate court reversed and remanded the practice valuation, concluding the family court treated goodwill as necessarily having a value greater than zero and failed to address the nature of goodwill in a sole professional practice.
- The state supreme court granted discretionary review on (1) goodwill valuation and (2) whether the family court mistakenly believed it was required to divide marital property equally.

## Issues

1. Whether goodwill in a closely held or sole-proprietor professional practice can include both personal goodwill (tied to the professional) and enterprise goodwill (tied to the business), and how that distinction affects marital-property valuation.
2. Whether the family court erred by valuing the practice’s goodwill without separating personal and enterprise components and by relying on the challenged expert methodology.
3. Whether the family court improperly assumed Kentucky law required a 50–50 division of marital property rather than an equitable division based on statutory factors.

## Decision

- The court affirmed the remand for reconsideration of the practice valuation, but on different grounds than the intermediate court.
- The court held that goodwill in a closely held or sole-proprietor business may include both personal goodwill and enterprise goodwill.
- The court concluded the family court’s valuation analysis was flawed because it did not properly account for the personal/enterprise goodwill distinction, particularly given evidence that the wife alone generated patients and reputation-based value.
- The court affirmed the approximate 50–50 division of the marital estate, holding the family court did not abuse its discretion and did not act under the mistaken belief that equal division was mandatory.
- The case was remanded for further proceedings limited to valuing the practice consistently with the clarified goodwill framework.

## Legal Principles

- Goodwill in a professional or closely held business may have two components: (1) personal goodwill attributable to an individual’s skills, reputation, and relationships, and (2) enterprise goodwill attributable to the business as a transferable going concern.
- Personal goodwill, as a nontransferable attribute of the individual, is not treated as divisible marital property; enterprise goodwill may be considered a marital asset subject to division.
- Business valuation in dissolution proceedings must use evidence-based methods that meaningfully distinguish personal earning capacity from enterprise value, rather than mechanically combining methods without analytical support.
- Kentucky’s marital-property statute requires an equitable division based on statutory factors; it does not mandate an equal (50–50) division, though an equal division may be permissible if supported by the record.
- Appellate review defers to the family court’s property-division determinations absent an abuse of discretion.

## Conclusion

The court clarified that goodwill in a sole professional practice may include both nonmarital personal goodwill and marital enterprise goodwill, requiring valuation methods that separate the two; it remanded for revaluation of the practice while affirming the family court’s approximately equal division of the marital estate.


Gaskill v. Robbins, 282 S.W.3d 306 (Ky. 2009)