Physician Practices and Goodwill
Physicians are among the highest-earning professionals in the United States, but they also have some of the highest divorce rates. When physicians get divorced, one of the key issues that often arises is the valuation of their practice, including the issue of goodwill.
Goodwill is the value of a business or practice that is based on its reputation, brand, customer base, and other intangible factors. For physicians, goodwill can be a significant portion of the value of their practice, and it can be a contentious issue in a divorce.
In a divorce, the value of a physician’s practice is typically determined through a process called business valuation. Business valuation involves assessing the value of the assets, liabilities, and earnings of the practice, as well as the value of any goodwill.
Types of Goodwill
There are two types of goodwill that can be associated with a physician’s practice: personal goodwill and enterprise goodwill. Personal goodwill is the goodwill that is associated with the physician’s individual reputation, skills, and relationships with patients. Enterprise goodwill is the goodwill that is associated with the practice as a whole, including its brand, location, and patient base.
The valuation of personal goodwill can be a contentious issue in a divorce, as it is often difficult to separate the physician’s individual reputation from the reputation of the practice as a whole. If the physician can demonstrate that a significant portion of the practice’s value is attributable to their personal goodwill, they may be able to exclude that value from the marital estate, which can result in a lower payout to their spouse.
On the other hand, if the physician cannot demonstrate that a significant portion of the practice’s value is attributable to their personal goodwill, the value of the practice, including any goodwill, will be considered marital property and subject to division in the divorce settlement.
It’s important for physicians going through a divorce to work with an experienced family law attorney who can help protect their interests and ensure that the value of their practice is accurately assessed. A good attorney can provide guidance on issues such as personal goodwill, enterprise goodwill, and the appropriate valuation of the practice, and can help negotiate a fair settlement that takes into account the needs and interests of both parties.
In addition to working with an attorney, physicians going through a divorce may benefit from seeking support from friends, family, or a therapist. Divorce can be a stressful and emotional process, and physicians may face additional stressors related to the demands of their profession. Seeking support can help physicians manage the challenges of divorce and maintain their well-being.
When physicians get divorced, the issue of goodwill can be a significant concern. It’s important for physicians to understand the valuation process and the different types of goodwill that can be associated with their practice. By working with an experienced family law attorney and seeking support as needed, physicians can navigate the divorce process with confidence and protect their interests.