Contrary to myth that dentists suffer outsized divorce rates, the divorce rate for dentists is approximately 25% which is lower than the nationwide average. Still, dentists do get divorced and the dentists who own their practices may have to divide the value of their dental practice in an Illinois divorce. This article serves as a guide to dentists and their spouses who must value and divide a dental practice in an Illinois divorce. A Dental Practice Appraisal Must Begin With Defining What Is Being Valued What is a dental practice worth? The answer depends on what is actually being valued. A dentist may own a whole solo practice, a small interest in a group practice, shares in a professional corporation, or an interest in a professional limited liability company. The dentist may also own the office building, another related business, or an interest in a management company. These interests are not necessarily worth the same thing. Similarly, the price paid for selected practice assets does not automatically establish the value of the dentist’s ownership interest. A transaction may include equipment, patient-related intangible assets, a trade name, or a covenant not to compete while excluding cash, liabilities, real estate, or other property. The court must use fair market value in an Illinois divorce. Section 503(k) of the Illinois Marriage and Dissolution of Marriage Act states that “the court shall employ a fair market value standard.” 750 ILCS 5/503(k). The valuation date is the date of trial unless the parties agree to another date or the court chooses another date within its discretion. Id. Accordingly, before applying a multiple or projecting earnings, the appraisal should identify the entity or entities being valued, the dentist’s percentage and class of ownership, the rights and restrictions attached to that interest, the assets and liabilities included, the valuation date, and whether the practice is expected to continue operating. A dental practice may have substantial intangible value, so these distinctions matter. Business Valuation Resources identifies accounts receivable, equipment, supplies, managed-care agreements, patient and recall lists, a trained workforce, employment agreements, trade names, favorable leases, management systems, and other tangible and intangible assets that may exist in a dental practice. Business Valuation Resources, What It’s Worth: Valuing Dental Practices 59-64 (2024). So, the appraisal should start with this question: What property does the dentist actually own? What Does The Dentist Actually Own? A dentist may own all of […]
