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What Business Valuation Challenges Do Health Care Professionals Often Face During Divorce?

Divorces for health care professionals often involve substantial assets and require business valuation when determining equitable distribution of marital property.

An article published by the American Academy of Matrimonial Lawyers (AAML) entitled Divorce Value: Standards of Value for Professional Practices and Closely Held Businesses points out that various states recognize different methods of business valuation for health care professionals. Lawyers handling divorces of health care professionals must be well versed in the legal nuances involved.

For example, Florida courts employ the method of fair market value for determining the value of professional goodwill. Professional goodwill is an aspect of business valuation. Furthermore, Florida courts generally differentiate between practice or entity goodwill and personal goodwill.

What does this mean? It means when establishing a practice’s value, some courts allow consideration of the health care practitioner’s personal goodwill as a part of the valuation. Personal goodwill includes the individual’s abilities or characteristics, such as the practitioner’s age, experience, past earning capacity, business success and reputation. These qualities are assigned a monetary value calculated into the business’s net worth. An attorney might argue that when a practitioner sells the practice and is no longer part of it, personal goodwill is no longer a factor — only the fair market value, which compares similar businesses based on what such practices sell for in the marketplace. Whether courts consider professional goodwill as a marital asset when evaluating businesses depends on the jurisdiction and established case law.

Divorce for health care professionals is inherently complex, which is why it is vital to obtain a divorce lawyer with experience in this specific area.

Our attorneys at the Law Offices of Schwartz | White draw on more than 50 years of combined legal experience and employ forensic accountants and business valuators skilled in the sophisticated procedures necessary for health care professionals’ divorces.

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