## Facts

- Tracy J. McReath and Timothy J. McReath were married for about 19 years and had three minor children.
- Tim was an orthodontist; Tracy was primarily a homemaker and the children’s main caregiver during the marriage.
- Tim obtained a dental degree and an orthodontics degree during the marriage; student loans for his education were repaid with marital funds.
- Tim worked for Orthodontic Specialists, S.C. (OS) and later purchased two OS locations for $930,000, allocating $100,000 to tangible assets and the business name and $830,000 to goodwill, with a noncompete and transition agreement from the seller.
- In the divorce, the parties agreed on valuation and division of all marital property except Tim’s interest in OS.
- The circuit court valued OS at about $1,058,000, included its professional goodwill in the marital estate, ordered Tim to pay Tracy $796,720 to equalize property division, and awarded Tracy maintenance of $16,000 per month for 20 years based on Tim’s expected future earnings from OS.
- Tim challenged (1) treating the practice’s professional goodwill as divisible property and (2) alleged “double counting” because goodwill was included in property division while future earnings informed maintenance.

## Issues

1. Whether the entire value of the salable professional goodwill in Tim’s interest in Orthodontic Specialists, S.C. is divisible property in the marital estate.
2. If so, whether the circuit court impermissibly double counted goodwill by including it in the property division while basing maintenance on Tim’s expected future earnings from the practice.

## Decision

- The Wisconsin Supreme Court affirmed the court of appeals and upheld the circuit court’s judgment.
- The Court held that the entire value of the salable professional goodwill in the orthodontic practice was properly included as divisible marital property.
- The Court held the circuit court did not impermissibly double count goodwill when it considered Tim’s future earnings from the practice in setting maintenance.

## Legal Principles

- Salable professional goodwill associated with a professional practice may be treated as divisible marital property when it is capable of transfer in the marketplace.
- Wisconsin courts need not separate “personal goodwill” from “enterprise goodwill” when the goodwill at issue is shown to be salable as part of the practice.
- Property division and maintenance serve different functions: property division allocates marital assets as of divorce, while maintenance addresses post-divorce support and the marital standard of living; consideration of both practice value (including goodwill) and future earnings is not automatically improper.
- A “double counting” challenge fails where the court values and divides the business as an asset and separately evaluates the professional spouse’s future income stream for maintenance without re-allocating the same asset a second time.
- Valuation of marital property and maintenance awards are discretionary determinations upheld when supported by credible evidence and a reasonable application of statutory factors.

## Conclusion

The court treated the orthodontic practice’s salable professional goodwill as fully divisible marital property and allowed maintenance to be based on the orthodontist spouse’s future earning capacity, concluding that these determinations did not constitute impermissible double counting.


McReath v. McReath, 800 N.W.2d 399 (Wis. 2011)