A dental practice is the culmination of a decade or more of advanced education, serious financial investment, and tremendous personal sacrifice. It represents not only a primary source of income but is often the most significant and complex financial asset in the marital estate. A divorce is more the dissolution of a personal relationship; it is a critical financial event that places your life's work at risk.
A divorce involving a successful dental practice demands real expertise in complex business valuation, state-specific property law, financial planning, and uncompromising trial advocacy. The financial futures of both spouses hinge on your choice of legal counsel. This guide provides an overview for dentists in Oklahoma and Arkansas. It covers the valuation of the dental practice, the pivotal concept of goodwill, alimony, asset tracing, and how to identify legal counsel qualified to protect a professional's financial future.
Valuing the Practice
The central challenge in a dentist's divorce is the accurate valuation and legal classification of the dental practice's components. An error in this phase can have multi-million-dollar consequences, making a proper understanding of the process essential. There are three general approaches that a valuation expert and a court may consider for valuing a dental practice:
Income Approach: This is the most common and generally most appropriate method for valuing a profitable service business like a dental practice. It determines the practice's value based on its historical earnings and its ability to generate a predictable income stream and cash flow in the future. Methods like the capitalization of earnings or discounted cash flow fall under this umbrella.
Asset Approach: This method calculates the value by summing the fair market values of all the practice's individual assets—both tangible (equipment, real estate, cash) and intangible (goodwill, patient lists)—and then subtracting its liabilities.
Market Approach: This approach values the practice by analyzing the sale prices of comparable dental practices in the same geographic area. While it can serve as a valuable "sanity check" for the other methods, its reliability depends on the availability of truly comparable sales data, which can be difficult to obtain.
A trial court has significant discretion in selecting the appropriate valuation method. This makes the attorney's role critical. An attorney must not only understand these financial models but also possess the skill to advocate for the method that best serves your interests and effectively challenge an opposing expert's reliance on a less favorable or inappropriate methodology.
Personal and Enterprise Goodwill
In a professional practice, the most valuable asset is often intangible goodwill. Goodwill is defined as "the expectation of continued public patronage" and arises from a business's name, reputation, patient loyalty, location, and other factors not separately identified on a balance sheet. For a dental practice, goodwill can constitute 70% to 80% of its total value, making its legal classification the central financial battleground of the divorce.
The law in both Oklahoma and Arkansas distinguishes between two types of goodwill, a distinction that can shift hundreds of thousands of dollars into or out of the divisible marital estate.Personal goodwill is tied directly to the individual dentist’s unique skills, professional reputation, judgment, and personal relationships with patients and referring doctors. Because this goodwill is inseparable from the dentist and cannot be sold or transferred without them, it is considered the dentist's separate, non-marital property and is not subject to division in the divorce. It is fundamentally an attribute of the person, not the business entity. Enterprise (or Business) goodwill is an asset of the practice itself, independent of any single individual. It derives from factors that would remain if the owner-dentist were replaced, such as a prime location, a well-known brand name, established operational systems, valuable contracts with insurance providers, and a highly trained staff. This type of goodwill is considered a marital asset and is subject to equitable division.
Consider the following hypothetical. If a practice is valued at $2 million, where goodwill accounts for $1.5 million of that value, misclassifying just 20% of that goodwill from personal to enterprise improperly adds $300,000 to the marital estate. This could result in the dentist spouse paying the other spouse an additional $150,000. An attorney unfamiliar with this doctrine may not even recognize the issue, let alone possess the expertise to build a case and argue it effectively before the court.
Oklahoma law clearly excludes personal goodwill that is tied to an individual's reputation from the marital estate. Appellate decisions such as Travis v. Travis and Mocnik v. Mocnik established that goodwill dependent on the continued presence and reputation of a particular individual is not a marketable, and therefore not divisible, asset. In Travis, the court found a sole practitioner's law practice had no divisible goodwill because the lawyer's reputation could not be purchased. While ethical rules have since evolved to allow for the sale of law practices, the underlying principle that personal, non-transferable reputation is separate property remains the law.
Arkansas law is equally clear that for goodwill to be marital property, it must be a "marketable business asset with value independent of the presence or reputation of a particular individual". The case of Tortorich v. Tortorich provides strong precedent for dentists. In that case, the court found that an oral surgeon's practice value was almost entirely personal goodwill because it relied heavily on professional referrals and lacked a recurring patient base for routine procedures. This precedent is highly relevant for dental specialists.
For successful dentists, the very act of expanding to multiple locations systematically weakens the argument for personal goodwill and strengthens the case for enterprise goodwill. A multi-office practice, by its nature, must rely on standardized systems, a recognizable brand, and a team of associate dentists and staff that can operate without the owner's constant physical presence at every site. This structure inherently creates a more transferable—and therefore more divisible—asset.
A dentist with a single office bearing their name has a strong case that the practice's value is tied to their personal reputation. A dentist with five locations under a branded name like "Heartland Dental Care" faces a much more complex valuation analysis. The opposing spouse will argue that the brand, systems, and locations constitute significant, divisible enterprise goodwill. Defending against this requires a strong, fact-based presentation that parses the value attributable to the founder's ongoing individual guidance (personal) from the value of the established, self-sustaining business enterprise (marital).
Financial Claims
The issues in a high-asset, high-income divorce extend beyond the value of the practice itself. Broadly, the analysis of alimony claims is very similar in that it is fact-sensitive and based on a number of factors. There is no statutory calculator or formula for determining alimony. If you see a calculator online, it is wrong. Alimony factors include, but are not limited: the length of the marriage, the age of each spouse, the overall value of jointly-owned property, how the property is divided between the spouses, the standard of living that each party became accustomed to during the marriage, each party’s earning capacity and earning potential, any other current or anticipated income of either party, any award of child support in the case, and any medical support needs of either party that would impact monthly expenses or the ability to pay support.
When one spouse supported the other through professional school and divorce occurred shortly thereafter, the supportive spouse may obtain compensation for their sacrifice. This was addressed in the landmark Oklahoma Supreme Court case of Hubbard v. Hubbard. In Hubbard, the wife worked to support her husband while he attended medical school. They divorced shortly after he became licensed. As few valuable marital assets had been accumulated, the court was faced with how to compensate the wife for her substantial investment in his future earning capacity. The Court rejected the claim that a professional degree or the resulting future earnings are "property" that can be divided.To prevent the "unjust enrichment" of the newly-degreed spouse, the court created a special equitable remedy: an award of alimony in lieu of property division. This award is not a percentage of the dentist’s future lifetime income. It is a reimbursement for the supporting spouse's quantifiable past investment, calculated based on their contributions to direct support, tuition, and other school-related expenses. Hubbard alimony is rare and reserved for cases where a divorce occurs shortly after obtaining a license to practice where the professional would unfairly benefit in the future from the sacrifices made by the other spouse during the professional’s education.
Tracing and Dividing Investments
In a successful dental practice, profits are rarely confined to a single business account. Income is often used to fund a diverse portfolio of other marital investments, including commercial real estate, stock and bond portfolios, and other business ventures. A crucial task in any high-asset divorce is the forensic tracing of these funds from the practice to the various assets they were used to acquire. This process of identifying and characterizing assets as marital property requires meticulous financial analysis. Bundy Law has extensive experience representing both dentists and their spouses in these exact scenarios, working closely with forensic accountants to trace, identify, and value all assets acquired with practice income to ensure a complete and accurate marital balance sheet.
A significant modern challenge in divorce is the rise of cryptocurrency holdings. Its decentralized, pseudo-anonymous nature and the ability to store it offline in unhosted "cold" wallets make it an attractive vehicle for spouses attempting to conceal marital assets. The notion that crypto is completely "untraceable" is a dangerous myth. While challenging, a systematic forensic investigation can uncover these hidden assets. The blockchain, the technology underlying cryptocurrencies like Bitcoin, is a public, immutable ledger of every transaction. The key is to connect a real-world identity to a specific wallet address. A specialist legal team directs a multi-pronged investigation to achieve this:
- Traditional Discovery and Financial Analysis: The investigation begins by subpoenaing traditional financial records. Bank and credit card statements are scrutinized for transfers to cryptocurrency exchanges like Coinbase or Kraken, which serve as the "on-ramps" from fiat currency to crypto.
- Digital Forensics: The next step involves securing and creating a forensic image of all relevant electronic devices—computers, smartphones, and external hard drives. A digital forensics expert can then search these devices for wallet software, transaction logs, private keys, or seed phrases that prove ownership and control of crypto assets.
- Blockchain Analysis: Once a wallet address is identified, forensic accountants use sophisticated analysis software (such as Chainalysis) and advanced techniques to follow the flow of funds. Techniques like "clustering" group multiple addresses likely controlled by the same person, while "taint analysis" can trace funds even after they have passed through "mixing" services designed to obscure their origin.
Choosing an Attorney
The choice of legal counsel is the most important decision you will make.Hiring an attorney without specialized expertise in high-asset and complex property divorces is not just a risk; it is a significant financial liability. The errors made by a generalist can be catastrophic and irreversible. The potential losses from a single error made by an inexperienced attorney in a high-asset case can easily reach six or seven figures—dwarfing the cost of retaining the right expert from the outset.
Common, costly mistakes include accepting a flawed valuation and overlooking assets. A generalist attorney may lack the financial literacy to identify weaknesses in an opposing expert's business valuation. As shown above,failure to properly challenge an incorrect goodwill allocation or an inappropriate valuation methodology can result in the client overpaying by hundreds of thousands of dollars in a settlement. An attorney unfamiliar with modern financial instruments may fail to conduct the necessary discovery to uncover assets held in cryptocurrency, offshore accounts, or trusts. This can leave a significant portion of the marital estate completely off the table, resulting in a permanent unfair division.
For a business-minded professional like a dentist, the choice of counsel should be viewed as part of risk management. The legal fees for high caliber attorneys are an investment in mitigating financial catastrophe. A strong legal team should include an experienced trial attorney, a forensic accountant, and a digital forensic expert. We have successfully managed these cases on both sides, representing dentists, orthodontists, oral surgeons, and their spouses.
Our experience in cases involving dentistry is only one part of our qualifications. Our senior partners, Aaron Bundy and Kathleen Egan, are fellows of the American Academy of Matrimonial Lawyers. AAML fellowship is one of the most rigorous and respected credentials in the field of family law. Each of our firm’s partners has completed the National Family Law Trial Institute's (NFLTI) Advanced Business Valuation program. Board-certified for family law trials by the National Board of Trial Advocacy, Aaron Bundy completed a year-long Certified Financial Planner certificate program at Southern Methodist University. The curriculum covered the entire spectrum of personal finance: investments, tax planning, retirement and pension analysis, and estate planning.
This combination of specialized financial and valuation training and experience working on high net worth cases enhances our skill set needed to deconstruct an opposing expert's valuation. Our ability to inspect and critique an expert's choice of valuation method, risk calculations, or goodwill allocation can directly and sometimes dramatically influence the court's final determination of a practice's value.
At Bundy Law, we have successfully represented dentists, physicians, pharmacists, and their spouses in Oklahoma and Arkansas, navigating every complex issue detailed in this guide—from the valuation and division of multi-office professional practices to the forensic tracing of cryptocurrency. We invite you to schedule a consultation to discuss how our expertise can protect your life's work and secure your financial future.