Managing a Private Practice’s Personal vs. Business Goodwill in a Virginia Divorce
For professionals who own private practices, divorce often raises difficult questions about how the value of the business will be divided. Doctors, dentists, lawyers, and other solo practitioners are usually concerned about whether their practice will be considered marital property and, if so, how much of its value will be subject to division. This makes the distinction between personal goodwill and business goodwill a key issue in Virginia divorces.
With more than 15 years of experience, including representing high net worth families in complex property division cases, Nicole M. Burns, Attorney at Law is a Loudoun County, VA divorce lawyer who understands the challenges professionals face when personal reputation and business assets overlap.
What Does Virginia Law Say About Property Division?
Virginia follows an equitable distribution system under Va. Code § 20-107.3. This means marital property is divided fairly, though not always equally. A private practice that was created or that grew during the marriage may be classified, at least in part, as marital property. Before dividing any business interest, the court must determine its value. In the case of professional practices, valuation often depends on separating personal goodwill from business goodwill.
What Is Personal Goodwill in a Professional Practice?
Personal goodwill refers to the value of a practice that is tied directly to the skills, reputation, and relationships of the professional. For example, if a dentist has built a strong following based on personal expertise and patient loyalty, that goodwill is personal. In Virginia, personal goodwill is not considered a divisible marital asset. The reasoning is that it cannot be sold or transferred apart from the individual.
What Is Business Goodwill in a Professional Practice?
Business goodwill, by contrast, is the value of the practice that exists beyond the individual professional. This may include the practice’s location, brand recognition, staff, management systems, and client base that would continue if another professional stepped in. Business goodwill is considered a divisible marital asset and may be subject to equitable distribution in divorce.
How Do Virginia Courts Separate Business Goodwill and Personal Goodwill in a Divorce?
Distinguishing between personal and business goodwill is not simple. Courts often rely on expert testimony from accountants, financial analysts, or valuation professionals. These experts may look at the practice’s earnings, contracts, client retention rates, and whether the business could continue operating if the professional left.
For example, a medical practice with several employees, a recognizable name, and recurring revenue streams may have significant business goodwill. A solo attorney’s practice that relies entirely on one lawyer’s reputation and referrals may have mostly personal goodwill.
Protecting Your Professional Practice During Divorce
If you own a private practice, careful planning is very important. Gathering detailed financial records, maintaining a clear separation between personal and business expenses, and working with valuation experts can help ensure the court accurately distinguishes between personal and business goodwill.
Doing this is not just a matter of rote legal activity. Having an experienced lawyer on your side who can make a strong argument, using solid evidence, can make an enormous difference in how a business is divided.
Contact a Fairfax, VA County Divorce Lawyer
Dividing a private practice in divorce requires a lawyer who understands both the law and the financial realities of professional businesses. At Nicole M. Burns, Attorney at Law, we focus on guiding professionals through complex divorces, including high net worth cases where private practice valuation is at stake. With over 15 years of experience, we bring the knowledge and dedication needed to protect what you have built.
If you are a private practitioner facing divorce, call 703-373-4761 today to speak with a Loudoun County, VA asset division attorney. We will help you navigate the distinction between personal and business goodwill to pursue a fair outcome.
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Located in Reston, VA, Nicole M. Burns, Attorney at Law represents individuals and families throughout the area, including Annandale, Arlington, Ashburn, Bristow, Broadlands, Burke, Centreville, Chantilly, Dale City, Dumfries, Dulles, Fairfax, Falls Church, Gainesville, Great Falls, Haymarket, Herndon, Lake Ridge, Leesburg, Manassas, McLean, Montclair, Nokesville, Oakton, Potomac Falls, Sterling, Tysons Corner, Vienna, Woodbridge, Fairfax County, Loudoun County, Prince William County, and Arlington County.
