Kentucky Has Opportunity to Join Majority In Distinguishing Personal v. Enterprise Goodwill Per Shannon Pratt

Personal Versus Enterprise Goodwill
Gaskill v. Robbins digested here and discussed here was the subject of an article in the February 2007 edition of Business Valuation Update by Shannon Pratt: Kentucky Has Opportunity to Join Majority In Distinguishing Personal Versus Enterprise Goodwill (subscription only, not available online).

Personal Versus Enterprise Goodwill
Gaskill v. Robbins digested here and discussed here was the subject of an article in the February 2007 edition of Business Valuation Update by Shannon Pratt: Kentucky Has Opportunity to Join Majority In Distinguishing Personal Versus Enterprise Goodwill (subscription only, not available online).
On appeal, the wife contended the family court “operated under the misconception that it was compelled to assign a goodwill value” to her practice, and the Court of Appeals agreed. While Kentucky law requires considering goodwill in the valuation of a medical practice-it does not compel it, and the case merited remand.
At the wife’s urging, the Appeals Court also considered whether Kentucky law should join the majority of US jurisdictions in distinguishing enterprise and personal goodwill in divorce actions….
As in the May case, which went through an appeals process to the highest state level, the Kentucky Court of Appeals may simply have deferred the ultimate question to the Kentucky Supreme Court. In a dissent, a senior judge on the appellate panel indicated he believed “personal goodwill should not be considered marital property to be divided between the parties.” However, he added, “This is a matter to be addressed to our Supreme Court,” as both the trial and appellate courts had not erred in their rulings under Kentucky law.

The case is not yet final. A motion for reconsideration is pending in the Kentucky Court of Appeals. As we previously grieved, however, it will be very difficult for the wife to move for discretionary review since she won a new child custody trial, and probably is more eager to have the case remanded for a new trial. These may not be the best facts for the Kentucky Supreme Court to revisit this issue, anyway, as the non-business owner spouse in Gaskill did contribute marital efforts working in his wife’s oral surgery practice. That complicates the issue of contribution of a spouse with the more precise issue of segregating personal goodwill from enterprise goodwill. However, the legal issue was well presented and perhaps if discretionary review is taken, the spousal contribution anomaly could be parsed from the precise issue.

Recent Posts

Kentucky Court of Appeals reverses Allen Family Court, vacates IPO extension based on insufficient written findings to support evidence of stalking by Respondent
March 20, 2023
Kentucky Court of Appeals upholds Jefferson Family Court order requiring Cabinet to pay for parents’ expert fees in DNA case with medical issue at center
February 8, 2023
Kentucky Court of Appeals affirms Simpson Family Court’s decision to allow third party intervention based on fraud which prevented him from being heard prior to motion to intervene
February 8, 2023