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that salary level to be goodwill. In re Marriage of Bookout, 833 P.2d 800, 803 (Colo. App. 1991);
In re Marriage of Banning, 971 P.2d 289, 292 (Colo. App. 1998).
The value of goodwill is not limited to the amount the owner could expect when selling the
business to another person. Instead, it is a property or asset which supplements the earning
capacity of another asset, a business, or a profession, and therefore, it is not the earning capacity
itself. It has real value to the business and to the marital estate regardless of its intangible
nature because, as one predictor of future profits, goodwill can positively affect a businesss
bottom line. In re Marriage of Graff, 902 P.2d 402, 405 (Colo. App. 1995). In addition, the
goodwill a business owner develops during a marriage can be transferred to the owners future
business endeavors. Banning, supra.
Placing a dollar figure on the goodwill of a business can be challenging and subjective
especially in an unstable business such as a new artists line of pottery that has seen a wide
disparity in profits from year to year. See, Poley, Valuing Business Goodwill in a Divorce, 26
Colo.Law. 53 (April 1997). But precedent shows that value in such an intangible asset does
exist, can be calculated, and must be included as part of the marital property, as in the matter of
Bookout, supra.
Although goodwill developed during the marriage is among the predictors of likely future
patronage of that business, any actual earnings of the business based on goodwill after the
dissolution of the marriage is considered separate property. Whether profits in a business climb
or fall once the dissolution decree has been signed is not an issue for the courts to consider. The
Uniform Dissolution of Marriage Act specifically says that property must be valued as of the
date of the decree. C.R.S. 14-10-113(5). Therefore, for the goodwill to be considered marital
property, its value must exist at the time of the dissolution of the marriage.
Throughout the country and for decades, the definition and subjective valuation of goodwill has
been used in dissolution cases. It is an intangible asset that must be considered by the court for
equitable distribution. See, e.g., In re Marriage of Foster, 42 Cal.App.3d 577 (1974); In re
Marriage of Lukens, 16 Wash.App. 481 (1976); In re Marriage of Nichols, 43 Colo.App. 383
(1978); In re Marriage of Hall, 103 Wash.2d 236 (1984).
Conclusion: Debbies reputation in the community, the quality of her work and expected public
and private patronage is all goodwill, an intangible asset that a Colorado Court can value and
distribute. The market value of Debbies pottery is $36,000 at the time of dissolution, exceeding
by $5,800 the amount she could have been expected to earn as an average pottery manufacturer.
Because this $5,800 is considered goodwill and is an asset acquired during the marriage, and is
therefore marital property, Howard is entitled to an equitable portion of the value of that
intangible asset.
With respect to future earnings on Debbies pottery, any value earned by goodwill after the
dissolution of Debbie and Howards marriage is considered to be Debbies separate property.
Howard is not entitled to any portion of any future assets created by the current goodwill.