A divorce proceeding that involves a person who owns a small professional practice such as a dentist, doctor, lawyer, psychologist can often times challenge the value of his or her professional practice. Much of this value of a small professional practice descends from “goodwill.” The South Carolina Supreme Court adopted a common definition of goodwill in 1989, describing it as, “...the advantage or benefit which is acquired by an establishment beyond the mere value of the capital, stock, funds, or property employed therein…”
Additionally, courts in other jurisdiction have attempted to further establish goodwill as two subdivided parts, being enterprise, or business, goodwill and personal, or professional, goodwill. Enterprise goodwill stems from characteristics specific to a particular business, no matter who owns or operates it. Personal goodwill derives from a particular individual rather than to the business the individual operates.
In a case called Dickert v. Dickert that took place about 5 years ago, the South Carolina Supreme Court addressed the issue of enterprise goodwill. Dr. Dickert owned a small dental practice and provided all of the financial support for his wife and family during the marriage. At first, the court included $256,517 in the valuation of the marital estate,
However, in the divorce trial, the Court reversed this and found that “because of the intangible nature of the goodwill asset, “enterprise goodwill” in a professional practice is not subject to equitable distribution.” Thus, the trial court re-divided the parties marital estate without the inclusion of the value of the husband’s dental practice. Ultimately, they decided that the only proper consideration of a small professional practice like Dr. Dickert’s is for an establishment of income for child and spousal support purposes.