John McTiernan and Donna Dubrow were a Hollywood married couple during parts of the 1980s and 1990s. He directed blockbuster, high-revenue action movies, such as Predator, Die Hard, Die Hard with a Vengeance, The Hunt for Red October, and The Last Action Hero. She was a production company executive. He earned a seven-figure income for each of the films he directed, and she earned a low, six-figure yearly income for producing films. They divorced in 1997. While dividing the community assets between the parties, the trial court determined that $1.5 million dollars of McTiernan's directorial business was goodwill; that good will is community property; and Dubrow was entitled to her half interest. McTiernan appealed.
In California, property acquired by either party during the marriage is presumed to be community property. When a marriage ends, each party is entitled to one-half of that community property. However, there can be no community property interest in any right that cannot be transferred. Good will is a part of a business's reputation brought about by the efforts of the business. Since the business can be transferred, it is community property; and since good will is a part of the business, good will is considered community property.
McTiernan argued that his unique skills, talent, and expertise as a director were not the good will of a business, but part of the qualities of a natural person. And, since, a natural person could not be transferred, his directorial qualities could not be community property.
The appellate court agreed with McTiernan, classifying him in a "professional standing" career, similar to a doctor or a lawyer, whose skills, reputation, and earning capacity could not be transferred or sold.
Although not relevant in the McTiernan case, often a spouse's "professional standing" career is paid for by community assets, such as his/her educational costs or financial support while pursuing the education. If so, the other spouse may be entitled to reimbursement for those assets if the marriage ends.