Career assets and personal goodwill: when earning capacity enters the division
Not everything a couple owns is recorded in a land registry or a bank. Where one spouse leaves the marriage with a profession, a reputation and a high salary, and the other with years devoted to the home, an equal division of the tangible assets is not necessarily an equal division in practice.
“This is not compensation for sacrifice and not a fine on success. It corrects a gap created by a division of roles the couple chose together, and from which one of them goes on benefiting after the separation.”
Adv. Ester Efrati · Head of the Family and Inheritance Department
What career assets are
A career asset is the earning capacity a person built up during the marriage. It appears in no register, it cannot be sold, and it stays attached to the person. Yet it has economic value, and it is sometimes the largest value accumulated in the marriage.
The term gathers several related things:
- Personal goodwill. A professional name that allows higher fees, attracts clients, or opens positions.
- Education and a professional licence. A degree, a specialisation, or a licence to practise law, accountancy or medicine obtained during the marriage.
- Seniority and experience that accumulated and that explain the present salary.
It is important to distinguish a career asset from business goodwill. Business goodwill attaches to the business itself, can be sold with it and is included in its value. Personal goodwill attaches to the person and cannot be separated from him. The two are assessed differently, and in a case involving a business both usually arise together.
And one point explains the whole difficulty: a career asset cannot be divided. Only the gap it created can be balanced, in money.
The reasoning behind the division
Recognition of career assets rests on a simple insight: a career is not built in a vacuum. It is built inside a household in which someone else carried a different part of the load.
The leading authority is the 2007 Supreme Court decision in which the court held that a spouse should not be denied a share in the fruits of the other’s career assets, in return for the support given during the relationship. The idea is not ownership of the other’s earning capacity, but balancing the outcome.
The judgment drew a distinction that became the professional vocabulary in this field, between the spouse who focused on the domestic sphere and the one who went out to earn. The court stressed that this is a distilled presentation rather than a description of the common reality, and that in many families both parties contribute in both spheres. Each case is decided on the particular balance in that family.
From that also comes the limit. The division is meant to capture the gap created through the relationship, and not what the person would have had anyway: natural talent, a profession acquired before the marriage, or success that came after the separation.
The legal basis, by date of marriage
There is a split here that many are unaware of, and it turns on one date: 1 January 1974, when the Spouses (Property Relations) Law came into force.
- Married before 1974. The judge-made community property presumption applies. It treats assets accumulated by joint effort as belonging to both spouses, and the benefit from career assets was considered within that framework.
- Married from 1974 onward. The statute and the resource balancing arrangement apply. The route for taking career assets into account is section 8(2), which allows the court in special circumstances to order that the balancing not be half and half, having regard among other things to future assets and to each spouse’s earning capacity.
Two emphases. First, this is not an automatic right. Section 8 speaks of special circumstances, and an evidentiary foundation is required rather than a general assertion. Second, the outcome is not a division of the career but a different balancing ratio, expressed in money or in other assets.
The general balancing arrangement, and what enters it, is set out on dissolving a partnership and resource balancing.
When the claim succeeds and when it does not
The case law has moved over the years toward broader recognition, but it never became an automatic rule. Each case is decided on its facts, and recurring features can be identified.
What strengthens the claim:
- A real and clear gap in earning capacity between the parties, not a small one.
- A link between the gap and the division of roles. A party who reduced hours, left work, postponed studies or relocated for the other’s career.
- The education or licence was obtained during the marriage, with the household’s funding or support.
- A long marriage, in which the gap had time to consolidate.
What weakens it:
- The career or goodwill was built before the marriage.
- Both parties pursued similar careers, with no real gap.
- The success rests mainly on personal talent unconnected to the support received.
- A short marriage, or equal parenting in which both carried the domestic load to a similar degree.
Two clarifications from practice. First, this is not inherently a gender issue: the outcome follows the actual division of roles rather than the identity of the parties. Second, balancing payments have been awarded even where both spouses practised the same profession, where the salary gap arose because one of them carried the main domestic load.
How the value is assessed
This is the hardest point, and the reason courts avoided the subject for years. A career asset is not traded, has no market price, and its assessment rests on assumptions about the future.
In practice the assessment is made by an expert appointed by the court, usually an economist or an actuary, resting on several elements:
- The actual gap between the parties’ incomes, over a period rather than in a single month.
- What each party’s earning capacity was at the start of the marriage, and how it changed.
- The share of the gap attributable to the relationship, net of personal talent, an earlier profession, and development that would have occurred anyway.
- The time horizon: remaining working years, and a discount rate to bring future payments to present value.
- Age, field of work and market trends in the relevant sector.
Two practical notes. First, appointing an expert lengthens the proceeding and costs money, so where the gap is moderate it is worth exploring an agreed arrangement before entering expert evidence. Second, the quality of the material given to the expert determines the outcome: payslips over years, reports, and documentation of career interruptions and relocations.
The form of payment
Since half a career cannot be transferred, the balancing is done in money. There are two main forms, each with an advantage and a drawback.
- A lump sum. Paid on separation, sometimes set off against another asset such as a share in the apartment. The advantage is a clean break: no continuing financial link and no dependence. The drawback is that the payer usually does not have that sum liquid at that moment.
- Periodic payments. Part of the earning gap paid over a defined period. The advantage is that it fits actual capacity. The drawback is that the financial link continues, and with it the potential for further litigation.
Where periodic payments are chosen, three things should be fixed in advance: the length of the period, an indexation mechanism, and what happens on a material change in income. An arrangement without them returns to court.
One point to be precise about: balancing payments for career assets are not maintenance. They derive from the division of property rather than from a maintenance obligation, and they do not lapse automatically on remarriage or a change in personal status.
The difference between the forums
On this issue, more than on most, the identity of the forum has a real consequence. It is a fact both parties should know, not only the one who is advised early.
The family court applies civil law and is bound by Supreme Court authority. It therefore applies section 8(2) of the Spouses (Property Relations) Law and the case law on career assets.
The rabbinical court hears property matters where they were properly joined, and applies Jewish law. Jewish law does not recognise future earning capacity as a divisible asset, so the tendency there is to respect the registration and to read sharing narrowly.
The practical meaning is that the same case can end differently in the two forums. And since the forum is settled at a very early stage, sometimes by whoever files first, that decision carries a price.
We say this plainly to both sides: a spouse who carried the domestic load should know that this right is examined in the family court, and a spouse who built the career should know that it may be examined there. Transparency on this point is better than a late discovery. See request for dispute resolution.
Avoiding the dispute in advance
Most of the litigation on this subject is avoided by agreement. Not because an agreement removes the issue, but because it makes it known in advance.
- A marital property agreement. It can expressly provide how a gap in earning capacity is to be treated, and it can also provide that the subject is not balanced. See marital property agreement.
- Documentation along the way. A party who reduces hours or leaves work for the family should have that recorded at the time rather than reconstructed afterwards.
- An updating mechanism. What happens when one party returns to study, when a child is born, or when the family relocates for work.
And for those already in proceedings: raise the issue early rather than in closing submissions. An evidentiary foundation built in advance is worth far more than an argument raised at the end.
Summary
Career assets are the way the law recognises that an equal division of tangible assets is not always an equal division in practice.
Three points are worth taking from here. First, this is not an automatic right: a real gap in earning capacity is required, and a link between it and the division of roles in the marriage. Second, a career cannot be divided, so the balancing is done in money, as a lump sum or in periodic payments. Third, the choice of forum has a real consequence here, and it is settled early.
If there is a significant earnings gap in your case, in either direction, contact us for an early review of the foundation.
What people ask most often
What is a career asset?
The earning capacity a person built up during the marriage: personal goodwill, education and a professional licence, seniority and experience. It appears in no register and cannot be sold, but it has economic value, and is sometimes the largest value accumulated in the marriage.
What is the difference between personal and business goodwill?
Business goodwill attaches to the business, can be sold with it and is included in its value. Personal goodwill attaches to the person and cannot be separated from him. In a case involving a business both usually arise together and are assessed differently.
What is the legal basis for the division?
For couples married before 1974 the judge-made community property presumption applies. For couples married from 1974 the route is section 8(2) of the Spouses (Property Relations) Law, allowing the court in special circumstances to order that the balancing not be half and half, having regard among other things to future assets and to each spouse’s earning capacity.
Is this an automatic right?
No. Section 8 speaks of special circumstances, and an evidentiary foundation is required for a real gap in earning capacity and for a link between it and the division of roles in the marriage. A general assertion is not enough.
What strengthens the claim?
A real and clear gap in earning capacity; a link between the gap and the division of roles, such as reduced hours or leaving work for the family; education or a licence obtained during the marriage with the household’s support; and a long marriage in which the gap had time to consolidate.
And what weakens it?
A career or goodwill built before the marriage; two parties with similar careers and no real gap; success resting mainly on personal talent; a short marriage; and equal parenting in which both carried the domestic load to a similar degree.
Can balancing be awarded where both spouses share a profession?
Yes. Balancing payments have been awarded in such situations where the salary gap arose because one of them carried the main domestic load. What matters is the actual division of roles rather than the profession.
How is the value assessed?
Usually by an expert appointed by the court, an economist or an actuary. The assessment examines the income gap over a period, earning capacity at the start of the marriage, the share of the gap attributable to the relationship net of personal talent and an earlier profession, and the time horizon with a discount rate.
How is it actually paid?
A career cannot be divided, so the balancing is done in money: a lump sum, sometimes set off against another asset such as a share in the apartment, or periodic payments over a defined period.
Which is better, a lump sum or periodic payments?
It depends on the circumstances. A lump sum severs the financial link but requires liquidity. Periodic payments fit actual capacity but preserve a continuing link. Where periodic payments are chosen, the length, an indexation mechanism and the effect of a material change in income should be fixed in advance.
Are balancing payments for career assets a form of maintenance?
No. They derive from the division of property rather than from a maintenance obligation, and they do not lapse automatically on remarriage or a change in personal status.
Does the forum affect the outcome?
Yes, significantly. The family court applies section 8(2) and the case law on career assets. The rabbinical court applies Jewish law, which does not recognise future earning capacity as a divisible asset. The same case can end differently in the two forums, and the forum is settled at a very early stage.
All pages in the Family and Inheritance department
The separation itself
The divorce processLeaving home before divorceReconciliation or divorceRequest for dispute resolutionDissolution of marriageEconomic abuseRestraining orderBreach of a divorce agreementThe children
Child supportChild support claimIncreasing or reducing supportSupport for a child born outside marriageCollecting support through National InsuranceSpreading a maintenance debtCustody and parenting timeShared parentingThe tender years presumptionChanging a custody arrangementRelocating abroad with the childrenParental alienationDealing with an alienating parentGuardian ad litemSurrogacyPaternity claimThe Youth (Care and Supervision) LawVisual parenting plan builderProperty and agreements
Prenuptial agreementSame sex prenuptial agreementSame-sex marriageNotarised prenuptial agreementDissolution of joint ownershipCareer assets and goodwillSelling the apartment on divorceCommon law partnersInheritance and estate planning
Wills and inheritanceInheritance between same-sex partnersEstate planningWills in estate planningIntergenerational transfer in estate planningTrustsDynasty trustSpecial needs trustInheritance orderProbate orderAgreements between heirsInheritance disputes between siblingsContesting a willNo-contest clause in a willLet us test whether there is a gap that needs balancing
A short consultation meeting with a lawyer from the department, to see whether a real gap in earning capacity exists and what documentation should be gathered to establish it or to answer it.