When it comes to going through a divorce, dividing marital property plays a large—and often a confusing—role. It’s important to go into it with your eyes wide open and with the best understanding of your finances as possible. If you or your spouse owns a business, it is also important to be knowledgeable about the concept of “good will.”
What Is Good Will?
“Good will” can be difficult to understand because, by definition, it’s fairly abstract. Maryland Courts define it as “the benefits a business receives for having a good reputation.” Even less formally, Judges have referred to it as “when and why old customers return to the old place.” Essentially, ”good will” is the value of a business that goes beyond the tangible value of capital and property. You might think it’s not possible to quantify something as intangible as “good will,” but in fact it will be quantified during a divorce.
Personal “Good Will” and Your Divorce
So what exactly does “good will” have to do with your divorce? When you are accounting for marital property, generally everything earned or acquired during your marriage comes into play. It gets complicated when valuing the marital value of a business owned by you or your spouse, as the “Good will” of the business may be taken into account when the Court is valuing and dividing marital property.
In some situations, Maryland courts will determine the “good will” to be personal, and then it is not to be valued and divided as marital property. This occurs most often when the business owner is a professional such as a doctor or lawyer. When it is your name that embodies the practice and your professional assurance that attracts and retains clients, then the intangible value of your business is a direct result of your personal “good will.” It is so personal that the entire value or a portion of the value of the business is not severable from your reputation. This “personal good will” (the tight link between your professional reputation and the value of your business) would not be considered as marital property and thus not subject to division in the divorce.
“Good will” and “personal good will” are complicated concepts, and it would be a costly mistake to overlook it or not take it seriously in determining and valuing the marital portion of your or your spouse’s business. If you or your spouse owns a business and are going through a divorce, you need to consult with an family law attorney to discuss the roles that “good will” and “personal good will” could play in your financial proceedings, as well as other important financial aspects of divorce that could otherwise pass-you-by or take you by surprise.
Need Help With “Good Will” and/or Business Ownership Matters Relating to Separation and Divorce in Maryland? Contact Andalman & Flynn
Getting a divorce can be a painful and confusing process. At Andalman & Flynn we have lawyers who can answer your questions and assist you with the complex legal and financial matters of your divorce. You may call (301) 563-6685 or email me at firstname.lastname@example.org to schedule a consultation with me or one of our other experienced divorce attorneys.
Fill out an online contact form if you need help with “good will,” business ownership, or any other matters relating to separation and divorce in the Maryland.
Mary Ellen Flynn has over 27 years of experience as a Divorce Lawyer. She has the highest attorney ratings by both Martindale-Hubell (“AV Preeminent”®) and Avvo (“10″) and has been recognized by Super Lawyers in Maryland every year since 2008.
You May Also Be Interested In:
- What Does it Mean that My Settlement Agreement is “Incorporated, But Not Merged” into the Judgment of Divorce?
- Debt Incurred During Our Marriage & We Are Separating/Divorcing
- New Divorce Laws Passed Impacting Couples with Settlement Agreements
- Additional Collaborative Law Blogs
- Additional Family Law Blogs