## Facts

- Two dissolution actions involved the same two-person oral surgery partnership in Jefferson City, Missouri, owned equally by two dentists who formed the partnership in 1973.
- The trial courts received substantially similar valuation evidence but reached sharply different partnership values.
- In one dissolution case, the trial court valued the partnership at $324,862, including a large component labeled “goodwill” (or “going concern value”).
- In the other, the trial court valued the same partnership at $90,280.
- The wives’ valuation expert (a CPA) assigned a substantial “going concern value” by applying a capitalization approach to prior-year gross receipts and described it as the benefit of stepping into an established practice and trading on the seller’s past reputation.
- The husbands contested that any goodwill existed apart from the dentists’ personal reputations and future earning capacity, and presented evidence suggesting similar practices were purchased without paying for goodwill.
- The appeals were consolidated to resolve whether professional goodwill is marital property in Missouri dissolution cases and, if so, how it must be proved and valued.

## Issues

1. Whether goodwill in a professional practice constitutes “marital property” subject to division in a dissolution proceeding.
2. How to distinguish divisible, business-related goodwill from a professional spouse’s nondivisible future earning capacity.
3. What evidentiary and valuation standards govern proof of professional goodwill in dissolution property division.

## Decision

- The Supreme Court of Missouri held that goodwill in a professional practice may be a marital asset subject to division.
- The Court ruled that future earning capacity is not marital property and may not be treated as goodwill through earnings-capitalization methods that effectively assign a present value to future income.
- The Court required that professional goodwill, to be divisible, must be shown to be a marketable asset of the practice and supported by fair market value evidence.
- The Court affirmed in part and reversed in part, remanding both dissolution cases for further proceedings consistent with its limitations on recognition and valuation of goodwill.

## Legal Principles

- Professional goodwill can be marital property only to the extent it is an asset of the practice as a going concern that has value to a willing buyer beyond tangible assets and receivables.
- A professional’s future earning capacity, personal reputation, and continued labor are not marital property; they are addressed through maintenance and support, not property division.
- Valuation of professional goodwill must rest on fair market value evidence (e.g., comparable sales, actual offers, or credible market-based expert proof) and must separate business goodwill from personal earning capacity.
- Capitalization of expected earnings, standing alone, is insufficient where it conflates business value with the professional’s future income stream.

## Conclusion

Missouri permits division of professional practice goodwill in dissolution proceedings, but only when it is proven to be a transferable, market-recognized asset of the practice and valued by fair market evidence that does not convert the professional spouse’s future earnings into marital property.


Hanson v. Hanson, 738 S.W.2d 429 (Mo. 1987)