Your Medical Practice Is Not Automatically Safe in Divorce: 7 Critical Truths Every Physician Must Know

"My spouse never worked in my practice. They have never even stepped foot in my office. How could they possibly be entitled to any of it?"

I hear this from nearly every physician I work with. And I understand why—it feels fundamentally unfair. But here is the reality: In most states, the value your practice gained during your marriage is often treated as a marital asset, and subject to division.

That practice you sacrificed everything to build? The one that cost you nights, weekends, and time with your family? It is not automatically yours to keep.

After 23+ years helping physicians protect their practices during divorce, I have watched too many doctors lose hundreds of thousands of dollars because they did not understand how practice valuation works, or worse, because they trusted the wrong professionals to protect them.

The Seven Critical Truths About Medical Practice Division

Truth #1: Your Practice May Be Your Largest Marital Asset (Depending on Your Situation)

For many physicians, the value of their medical practice—or their interest in a group practice—can exceed the value of their home and other assets, though this varies significantly based on practice structure, specialty, and years in practice.

Why this matters: Courts do not care which asset you prefer to keep. They care about equitable division of total marital assets, or in community property states, 50/50 division of the marital estate. If your practice represents 60% of your marital estate, you may need to give up other assets or pay your spouse cash to keep it.

Real case: A cardiologist in private practice had a home worth $800,000, retirement accounts totaling $600,000, and a practice valued at $2.4 million. To keep his practice, he had to give his spouse the house, half the retirement accounts, and pay her $400,000 cash over three years. He did not have $400,000, but he kept his practice.

Truth #2: Personal Goodwill vs. Enterprise Goodwill Can Make or Break You

This is where most physicians lose the most money, and where most attorneys get it wrong.

Personal goodwill is the value attributable to your individual reputation, skill, and patient relationships. In many states, this is a marital asset subject to division. In others, it is not. And in some cases, it depends on several factors including how the goodwill is valued, the structure of your practice, and specific state law precedents.

Enterprise goodwill is the value of the practice as a business entity, its systems, location, staff, patient base that would transfer to a new owner. This is typically a marital asset.

The catch? Goodwill is subjective, often misunderstood, and easily manipulated. If your experts do not know how to argue it—or your state law treats it differently—you could be giving away value you did not need to.

Research shows that properly arguing for personal goodwill recognition—in states where it is not divisible—can reduce practice valuations by 18% or more, potentially saving hundreds of thousands in divorce settlements. A Florida court ruling in 2020 established important precedent that personal goodwill in physician practices should not be divided as a marital asset, but only if you know how to argue this distinction and you practice in a state that follows this principle.

Real case: An orthopedic surgeon had been going through the divorce process for four years when he contacted me. The first thing I did was review both business valuation reports, the one prepared for him and the one prepared by his spouse's expert.

The opposing expert's report had significant holes in the methodology and assumptions. After I identified these critical errors and provided detailed analysis, the expert was disqualified following deposition.

But the problems did not stop there. His own expert had updated the practice valuation after several years of separation but failed to deduct the appropriate percentage for personal goodwill, a costly oversight that would have inflated the marital value by hundreds of thousands of dollars. We corrected this before settlement, protecting substantial equity the physician would have otherwise unnecessarily given away.

Truth #3: The Valuation Method Used Can Cost You Hundreds of Thousands

There are several methods for valuing medical practices, and the one used can dramatically impact what you owe:

• Income approach: Values practice based on future earning potential

• Market approach: Compares to recent sales of similar practices

• Asset approach: Values tangible and intangible assets

Each method can produce wildly different valuations for the same practice. I have seen the same practice valued at $800,000 using one method and $1.6 million using another.

Who chooses the method? Often, it is the appraiser, and if you do not have the right appraiser, you will pay for it.

Truth #4: Not All Experts Understand How Courts Value Medical Practices

Here is what most physicians do not understand: A business valuation for divorce is fundamentally different from a market valuation, and many professionals do not grasp this distinction.

After 23+ years working inside divorce cases, I have seen countless physicians rely on the wrong experts for practice valuation, and it costs them dearly.

The critical difference:

• Market valuation asks: "How much would someone pay to buy this practice?"

• Divorce valuation asks: "What is the value of the marital interest in this practice under state law?"

These are not the same question, and they do not produce the same answer.

Who cannot help you with divorce practice valuation:

Professional	Their Expertise	Why They Cannot Help in Divorce
Practice management consultants	Running efficient medical practices	Do not understand personal vs. enterprise goodwill distinctions under state law
Bookkeepers/accountants who manage your practice	Financial record-keeping and tax compliance	Not trained in business valuation methodology or divorce-specific valuation standards
Financial advisors who invest your money	Portfolio management and wealth building	No expertise in how courts value professional practices or divorce asset division
Business brokers	Selling practices at market value	Market value ≠ divorce valuation; do not understand marital property law

What you need: A credentialed business valuator (CVA, ABV, ASA, or CBA) who specializes in professional practice valuations for divorce purposes and understands the specific standards and case law in your state. Even better: a private divorce financial strategist who works with these valuators regularly, knows how to identify errors in valuation reports, and understands how to challenge inflated appraisals.

Why this matters: Courts do not care what a buyer might pay for your practice on the open market. They care about the fair market value of the marital interest based on specific legal standards, consideration of personal versus enterprise goodwill (depending on your state), and appropriate valuation methods recognized by the court.

This is exactly the type of analysis I do for physician clients, reviewing valuation reports from both sides, identifying methodological errors, and working with credentialed valuators to ensure the practice is valued correctly under the law, not overvalued based on market assumptions.

Real example: A dermatology practice owner used his practice management consultant to provide a "valuation" for divorce based on recent practice sale comparables in his specialty. The court rejected this entirely because it did not follow accepted business valuation methodology, did not address personal goodwill, and was not performed by a credentialed business valuator. He ended up paying for two more valuations, one for each side, costing him an additional $45,000 in expert fees, plus the delay added six months to his divorce timeline.

When I work with physicians on practice valuation, I review every assumption, every multiple, every adjustment in the valuation reports. I have identified errors that have saved clients hundreds of thousands of dollars, errors that their own attorneys did not catch because they lack the financial expertise to analyze business valuation methodology.

The professionals who understand divorce practice valuation:

• Certified business valuators with divorce experience (who I work alongside to protect my clients)

• Private divorce financial strategists who specialize in analyzing practice valuations (this is my core expertise)

• Forensic accountants who specialize in marital asset analysis

• Business valuation experts who regularly testify in family court

Bottom line: The same professionals who help you run your practice, manage your books, or invest your money are not equipped to protect your practice in divorce. You need specialized expertise in how courts approach medical practice valuation, and as a private divorce financial strategist with over two decades of experience analyzing physician practice valuations, this is exactly the blinde335io'

41552But here is where it gets complex: Even if you can prove you used separate property (inherited money, pre-marital savings) to buy in, that portion may not be entirely protected. Depending on your state's laws, there may still be a marital component based on:

• Active appreciation: If the practice value increased due to your efforts during the marriage (not just passive market growth), that appreciation may be marital property even if the initial buy-in was separate

• Commingling: If you used both separate and marital funds, or if the practice income during marriage was used to pay down the buy-in debt

• Transmutation: In some states, how you treated the asset during marriage (filing joint tax returns showing practice income, using practice distributions for marital expenses) can convert separate property to marital property

The bottom line: Even with documentation proving separate funds were used for your buy-in, the answer may not be as clear as you would think. Courts look at the entire picture, not just the source of the initial purchase funds.

Real case: A physician bought into a practice partnership using $200,000 inherited from his father, clearly separate property with full documentation. However, during the 15-year marriage, the practice value grew from $600,000 to $2.4 million, partially due to his efforts bringing in new patients and expanding services. The court ruled that while his initial $200,000 buy-in remained separate property, a portion of the appreciation was marital. His spouse received a share of the marital portion of the increased value, far less than if the entire practice interest was marital, but not zero as he had assumed.

What you need: Documentation of separate property sources, tracing of how those funds were used, and expert analysis of what portion of your practice interest is truly separate versus marital property. Most physicians assume "I have the documentation" means they are protected, but that is only the starting point of the analysis.

Truth #6: Non-Compete Clauses Can Destroy Your Negotiating Position

If you have a non-compete agreement with your practice, your options in divorce become severely limited. You cannot simply walk away and start a new practice if the division does not go your way.

Why this matters: Your spouse's attorney knows this. They know you are trapped and will push for higher practice valuations and larger settlements because you have no alternative.

Strategy: Before you get too far into divorce proceedings, understand your non-compete obligations and the penalties for breaking them. Sometimes, paying a non-compete penalty is cheaper than paying an inflated practice settlement.

Truth #7: Timing Your Divorce Can Save (or Cost) You Hundreds of Thousands

If you are contemplating divorce and you have plans to expand your practice, bring in new partners, or make significant practice changes, the timing of these events relative to your divorce filing matters enormously.

Example: If you are planning to sell your practice or bring in a new partner that will significantly increase the practice value, doing so before filing for divorce could cost you hundreds of thousands in the division.

Conversely, if your practice is going through a difficult period (reduced revenue, increased expenses, payer issues), this may be reflected in a lower valuation if done during the divorce process.

I am not suggesting you manipulate practice value—I am telling you to be strategic about timing and understand the implications.

The Questions Every Practice-Owning Physician Must Ask

Before you assume your practice is protected, ask yourself:

1. Do I know what my practice is actually worth from a divorce perspective?

2. Do I understand the difference between personal and enterprise goodwill in my state?

3. Have I documented any separate property contributions to my practice?

4. Does my divorce team include someone who understands medical practice valuation?

5. What are my options if I cannot afford to "buy out" my spouse's interest in my practice?

If you cannot answer these questions confidently, you are financially vulnerable.

Why You Need a Private Divorce Financial Strategist Who Understands Medical Practices

Your practice is not just an asset, it is your livelihood, your professional identity, and often your life's work. Protecting it requires specialized expertise that most divorce attorneys and financial advisors simply do not have.

What you need:

• A professional who understands medical practice valuation methods

• Someone who can distinguish between personal and enterprise goodwill

• An expert who can work with business valuators and challenge inflated appraisals

• A strategist who understands the interplay between practice structure, compensation, and divorce outcomes

• Someone with no conflict of interest in how your assets are divided or managed post-divorce

This is not about hiding assets or playing games. This is about ensuring that the practice you built with your own hands, your own skill, and your own sacrifices is valued fairly and protected appropriately.

Frequently Asked Questions

Q: Can I just give my spouse other assets instead of dividing my practice? 

A: Yes, if you have sufficient other marital assets to offset your spouse's share of the practice value. This is often the best strategy but requires careful planning and sufficient liquid assets or other property.

Q: What if my practice is worth more than all our other assets combined? 

A: This is common for physicians. Options include: structured payments to buy out your spouse's interest over time, refinancing other assets to create liquidity, or in some cases, selling the practice and splitting proceeds (though this is typically a last resort).

Q: My spouse wants half my future income from the practice. Is that legal? 

A: No. Your future income is not a divisible asset—but your spouse may be entitled to spousal support based on that income, and they may be entitled to a share of the current value of the practice which represents future earning potential already "baked in."

Q: Should I get my own business valuator or use the court's expert? 

A: Always get your own expert. Court-appointed experts are supposed to be neutral, but practice valuation involves significant subjective judgment. Having your own expert who understands how to value physician practices and can argue for personal goodwill protection is essential.

Q: Does it matter if my name is the only one on the practice ownership documents? 

A: No. In most states, what matters is when the practice was acquired or built and whether marital funds (including your income during the marriage) were used. Whose name is on the documents is largely irrelevant.

Coming up next in this series: High income does not equal financial security—especially in divorce. In "High Income ≠ Financial Security: What Physicians Miss Until It Is Too Late," I will reveal why even $500K+ physicians can end up financially devastated by divorce and how to convert income into real protection.

Previous blogs in this series:

• Blog #1: Building Wealth in Medicine… and Protecting It in Divorce: A Financial Strategy for Physicians

• Blog #2: Physician Divorce Financial Planning: Breaking the Money Silence That Costs Doctors Millions

• Blog #3: The Hidden Vulnerabilities - Why Physicians Become Financial Targets During Divorce

Don't leave your life's work to a "neutral" appraiser. Whether you are navigating California’s community property laws or an equitable distribution case in the Southeast, you need a strategy that goes beyond basic accounting.

Schedule Your Strategy Session HERE 

"Your medical practice represents more than just financial value, it represents your professional identity and life's work. Protecting it requires specialized expertise that most divorce professionals simply do not have."

About the Author: 

Gabriella E. Martinelli, CDFA® CDS® NCMP®, is the founder at Ever After Wealth® and a  Private Divorce Financial Strategist specializing in physician wealth protection. With over 22 years of experience identifying financial blind spots, she helps doctors architect divorce strategies that protect their practices, their wealth, and their futures.