## Facts

- James and Sally Stewart married in 1981 and divorced after a long-term marriage; they had two children who were adults by trial.
- Sally worked as an elementary school teacher and supported James through medical school while carrying primary child-rearing responsibilities.
- During the marriage, James became a dermatologist and acquired a 45% ownership interest in a professional corporation, Dermatology Clinic of Idaho, P.A. (DCI).
- Sally developed post-polio syndrome, reduced her work schedule to 80%, and faced a likely decline in earning capacity.
- In the divorce proceedings, the trial court valued James’s interest in DCI by identifying tangible assets and assigning additional value to professional goodwill that existed apart from James’s personal skill and reputation.
- The trial court treated separable professional goodwill as community property, awarded Sally an unequal share of community assets, and ordered spousal maintenance of $5,166 per month for twelve years.
- The district court affirmed the trial court’s goodwill determination and largely upheld the spousal maintenance award.
- James appealed, challenging the classification/valuation of goodwill and the maintenance award.

## Issues

1. Whether professional goodwill connected to a spouse’s interest in a professional corporation is divisible community property to the extent it is separable from the professional’s personal skill, reputation, and future earning capacity.
2. Whether the trial court abused its discretion in valuing goodwill using a capitalized excess earnings method and in finding the valuation supported by the evidence.
3. Whether the trial court abused its discretion by awarding $5,166 per month in spousal maintenance for twelve years despite an unequal division of community property.

## Decision

- The Idaho Supreme Court affirmed the district court’s decision upholding the trial court’s property characterization and valuation.
- The Court held that professional (enterprise) goodwill in a professional corporation may be community property when it exists independently of the professional’s personal attributes.
- The Court upheld the trial court’s finding that a portion of DCI’s goodwill was separable from James’s personal skill and therefore divisible.
- The Court held the goodwill valuation method and resulting figure were supported by substantial and competent evidence and were within the trial court’s discretion.
- The Court affirmed the spousal maintenance award, concluding the trial court did not abuse its discretion in amount or duration given the parties’ circumstances.

## Legal Principles

- Professional goodwill can be a divisible community asset when it constitutes enterprise goodwill separable from the professional’s personal skill, reputation, and future earning capacity.
- Personal goodwill that is inseparable from an individual professional’s attributes and anticipated future earnings is not community property.
- Valuation of community assets is a factual determination reviewed for substantial and competent evidence; trial courts have discretion to select reasonable valuation methods, including capitalized excess earnings.
- Courts may consider and avoid improper double counting by distinguishing enterprise goodwill from the professional’s future earning capacity addressed through support.
- Spousal maintenance is discretionary and reviewed for abuse of discretion; courts consider statutory factors including financial resources, ability to meet needs independently, duration of marriage, age and health, and the paying spouse’s ability to pay.
- An unequal property division does not bar maintenance where a long-term marriage and the recipient spouse’s health limitations and reduced earning capacity justify support.

## Conclusion

The Idaho Supreme Court upheld treating separable enterprise goodwill in a professional medical corporation as community property and affirmed a substantial, time-limited maintenance award based on the recipient spouse’s health-related limits and the paying spouse’s high earning capacity, finding no abuse of discretion in valuation or support.


Stewart v. Stewart, 143 Idaho 673, 152 P.3d 544 (Idaho 2007)