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Understanding Personal vs. Enterprise Goodwill in South Carolina Divorce Cases

Understanding Personal vs. Enterprise Goodwill in South Carolina Divorce Cases

What happens to the value of a professional practice when a marriage ends? A recent South Carolina Supreme Court decision provides crucial clarity.

When couples divorce in South Carolina, one of the most complex issues can be dividing a business or professional practice. A July 2024 South Carolina Supreme Court decision, Bostick v. Bostick, offers important guidance on a critical question: Is the “goodwill” of a professional practice marital property subject to division, or does it belong solely to the spouse who built the practice?

Bostick v. Bostick, 443 S.C. 360, 904 S.E.2d 875 (2024)

The Bostick Case: A 45-Year Marriage and Two Dental Practices
Dr. Earl Bostick and his wife Josie were married in 1970. Shortly after their marriage, Dr. Bostick became a dentist and opened his own practice. Over the decades, he developed two successful dental practices in South Carolina: Sea Island Dentistry in Beaufort and Earl Bostick Sr., D.M.D. and Associates, P.A. in Ridgeland.

After about 45 years of marriage, the couple separated and divorced. Before the trial, Dr. Bostick sold his Ridgeland practice for $569,000. The sales contract revealed that $424,140 of that amount—the lion’s share—was paid specifically for the goodwill and a covenant not to compete.

The central question: Was that goodwill marital property to be divided between the spouses, or was it Dr. Bostick’s separate property?

Personal Goodwill vs. Enterprise Goodwill: Understanding the Difference
South Carolina law recognizes two types of goodwill, and the distinction matters enormously in divorce cases:

Enterprise Goodwill is goodwill that exists independently of any individual’s personal efforts and will survive that person’s involvement with the business. It attaches to the business entity itself and is considered marital property subject to equitable division in a divorce.

Personal Goodwill, on the other hand, results from the reputation, knowledge, and skills of individual people. It cannot be separated from the person who created it. Because it is essentially part of that person’s earning capacity and professional reputation, it is not marital property and is excluded from division in divorce.

Key Principle from the Court:
“The goodwill of a service business, such as a professional practice [such as dentistry], consists largely of personal goodwill.”

Why the Goodwill in Bostick Was Personal
The Supreme Court examined the evidence and found several compelling factors showing the goodwill was personal to Dr. Bostick:

The practice bore only his name. Dr. Bostick established and solely owned the Ridgeland practice for decades. The practice’s identity was inseparable from his personal identity as a dentist.

His community involvement built the practice. Dr. Bostick immersed himself in the community to promote his business and build his reputation. He joined the Rotary Club and Chamber of Commerce, created marketing materials featuring his name and photograph, advertised in church brochures and on radio and television, and personally nurtured patient relationships by sending Christmas cards and maintaining individual contact.

Patients came because of him. The practice’s success depended on Dr. Bostick’s professional skills and personal relationships with patients. As the Court noted, “the very nature of a professional practice is that it is totally dependent upon the professional.”

The buyer required a covenant not to compete. This was particularly telling. The purchaser insisted that Dr. Bostick sign an agreement not to compete because the practice’s value was so closely tied to his reputation and relationships. Even though Dr. Bostick was approaching retirement due to health concerns, the buyer still demanded this protection—demonstrating that the goodwill was personal to him, not something that could easily transfer to a new owner.

What This Means for Divorcing Professionals
The Bostick decision reinforces several important principles for professionals going through divorce in South Carolina:

Professional practices typically involve personal goodwill. For dentists, doctors, lawyers, accountants, and other service professionals, the goodwill associated with their practices is usually personal rather than enterprise goodwill. The Court was clear: professional practices are “totally dependent upon the professional.”

The spouse claiming enterprise goodwill bears the burden of proof. In Bostick, the wife presented no evidence that the goodwill was enterprise goodwill. Without contrary evidence, the Court had only the husband’s evidence showing personal goodwill. If you’re claiming that your spouse’s practice has enterprise goodwill that should be divided, you need to present specific evidence supporting that claim.

The business doesn’t have to be “ongoing” after divorce. The Court of Appeals had incorrectly suggested that personal goodwill only applies when one spouse continues running the business after divorce. The Supreme Court rejected this notion, clarifying that the typical situation—as in Bostick—involves the business being sold to a third party, with neither spouse remaining involved.

A covenant not to compete is strong evidence of personal goodwill. When a buyer insists on a non-compete agreement, it’s often because the goodwill is personal to the seller. The market-driven necessity for such a covenant indicates that the business’s value depends on that individual’s continued absence from competition.

Factors Courts Consider
When determining whether goodwill is personal or enterprise, South Carolina courts look at numerous factors, including:

The owner’s personal reputation in the community
Community visibility and marketing efforts
The owner’s age and health
Work habits and personal involvement in the business
Education and experience in the industry
Special skills or talents
Whether the business name includes the owner’s name
The nature of the profession (service-based vs. product-based)
Patient or client loyalty tied to the individual
Whether a covenant not to compete was required in any sale

Practical Implications
If you own a professional practice and are facing divorce, the characterization of goodwill can have enormous financial implications. In the Bostick case, over $424,000 was at stake—money that would have been divided if the goodwill had been deemed enterprise goodwill, but was instead excluded from the marital estate because it was personal goodwill.

Understanding this distinction is crucial for:

Properly valuing the marital estate
Developing negotiation strategies in settlement discussions
Presenting evidence at trial about the nature of your business
Protecting professional assets you’ve spent decades building

Why Legal Guidance Matters
The Bostick decision underscores why divorcing professionals need experienced legal counsel who understands these nuanced property division issues. The distinction between personal and enterprise goodwill is fact-intensive, requiring careful analysis of how the business operates, how it was built, and what makes it valuable.

If you’re a professional facing divorce—whether you’re a dentist, physician, attorney, accountant, or other service provider—don’t leave these critical issues to chance. The difference between personal and enterprise goodwill can mean hundreds of thousands of dollars in your final settlement.

Bottom Line:
In South Carolina, the goodwill associated with most professional practices is personal goodwill—not marital property subject to division. But proving this requires presenting the right evidence about how your practice was built, maintained, and valued. Don’t navigate these complex waters alone.

Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. Every divorce case is unique, and the application of legal principles depends on specific facts and circumstances. If you’re facing divorce and have questions about property division, business valuation, or goodwill, please consult with a qualified family law attorney in South Carolina.

By Suzanne Klok|2025-11-12T17:57:09+00:00August 30th, 2024|Equitable Distribution/Property Division, Family Law, Goodwill|Comments Off on Understanding Personal vs. Enterprise Goodwill in South Carolina Divorce Cases

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About the Author: Suzanne Klok

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Understanding Personal vs. Enterprise Goodwill in South Carolina Divorce Cases

What happens to the value of a professional practice when a marriage ends? A recent South Carolina Supreme Court decision provides crucial clarity.

When couples divorce in South Carolina, one of the most complex issues can be dividing a business or professional practice. A July 2024 South Carolina Supreme Court decision, Bostick v. Bostick, offers important guidance on a critical question: Is the “goodwill” of a professional practice marital property subject to division, or does it belong solely to the spouse who built the practice?

Bostick v. Bostick, 443 S.C. 360, 904 S.E.2d 875 (2024)

The Bostick Case: A 45-Year Marriage and Two Dental Practices
Dr. Earl Bostick and his wife Josie were married in 1970. Shortly after their marriage, Dr. Bostick became a dentist and opened his own practice. Over the decades, he developed two successful dental practices in South Carolina: Sea Island Dentistry in Beaufort and Earl Bostick Sr., D.M.D. and Associates, P.A. in Ridgeland.

After about 45 years of marriage, the couple separated and divorced. Before the trial, Dr. Bostick sold his Ridgeland practice for $569,000. The sales contract revealed that $424,140 of that amount—the lion’s share—was paid specifically for the goodwill and a covenant not to compete.

The central question: Was that goodwill marital property to be divided between the spouses, or was it Dr. Bostick’s separate property?

Personal Goodwill vs. Enterprise Goodwill: Understanding the Difference
South Carolina law recognizes two types of goodwill, and the distinction matters enormously in divorce cases:

Enterprise Goodwill is goodwill that exists independently of any individual’s personal efforts and will survive that person’s involvement with the business. It attaches to the business entity itself and is considered marital property subject to equitable division in a divorce.

Personal Goodwill, on the other hand, results from the reputation, knowledge, and skills of individual people. It cannot be separated from the person who created it. Because it is essentially part of that person’s earning capacity and professional reputation, it is not marital property and is excluded from division in divorce.

Key Principle from the Court:
“The goodwill of a service business, such as a professional practice [such as dentistry], consists largely of personal goodwill.”

Why the Goodwill in Bostick Was Personal
The Supreme Court examined the evidence and found several compelling factors showing the goodwill was personal to Dr. Bostick:

The practice bore only his name. Dr. Bostick established and solely owned the Ridgeland practice for decades. The practice’s identity was inseparable from his personal identity as a dentist.

His community involvement built the practice. Dr. Bostick immersed himself in the community to promote his business and build his reputation. He joined the Rotary Club and Chamber of Commerce, created marketing materials featuring his name and photograph, advertised in church brochures and on radio and television, and personally nurtured patient relationships by sending Christmas cards and maintaining individual contact.

Patients came because of him. The practice’s success depended on Dr. Bostick’s professional skills and personal relationships with patients. As the Court noted, “the very nature of a professional practice is that it is totally dependent upon the professional.”

The buyer required a covenant not to compete. This was particularly telling. The purchaser insisted that Dr. Bostick sign an agreement not to compete because the practice’s value was so closely tied to his reputation and relationships. Even though Dr. Bostick was approaching retirement due to health concerns, the buyer still demanded this protection—demonstrating that the goodwill was personal to him, not something that could easily transfer to a new owner.

What This Means for Divorcing Professionals
The Bostick decision reinforces several important principles for professionals going through divorce in South Carolina:

Professional practices typically involve personal goodwill. For dentists, doctors, lawyers, accountants, and other service professionals, the goodwill associated with their practices is usually personal rather than enterprise goodwill. The Court was clear: professional practices are “totally dependent upon the professional.”

The spouse claiming enterprise goodwill bears the burden of proof. In Bostick, the wife presented no evidence that the goodwill was enterprise goodwill. Without contrary evidence, the Court had only the husband’s evidence showing personal goodwill. If you’re claiming that your spouse’s practice has enterprise goodwill that should be divided, you need to present specific evidence supporting that claim.

The business doesn’t have to be “ongoing” after divorce. The Court of Appeals had incorrectly suggested that personal goodwill only applies when one spouse continues running the business after divorce. The Supreme Court rejected this notion, clarifying that the typical situation—as in Bostick—involves the business being sold to a third party, with neither spouse remaining involved.

A covenant not to compete is strong evidence of personal goodwill. When a buyer insists on a non-compete agreement, it’s often because the goodwill is personal to the seller. The market-driven necessity for such a covenant indicates that the business’s value depends on that individual’s continued absence from competition.

Factors Courts Consider
When determining whether goodwill is personal or enterprise, South Carolina courts look at numerous factors, including:

The owner’s personal reputation in the community
Community visibility and marketing efforts
The owner’s age and health
Work habits and personal involvement in the business
Education and experience in the industry
Special skills or talents
Whether the business name includes the owner’s name
The nature of the profession (service-based vs. product-based)
Patient or client loyalty tied to the individual
Whether a covenant not to compete was required in any sale

Practical Implications
If you own a professional practice and are facing divorce, the characterization of goodwill can have enormous financial implications. In the Bostick case, over $424,000 was at stake—money that would have been divided if the goodwill had been deemed enterprise goodwill, but was instead excluded from the marital estate because it was personal goodwill.

Understanding this distinction is crucial for:

Properly valuing the marital estate
Developing negotiation strategies in settlement discussions
Presenting evidence at trial about the nature of your business
Protecting professional assets you’ve spent decades building

Why Legal Guidance Matters
The Bostick decision underscores why divorcing professionals need experienced legal counsel who understands these nuanced property division issues. The distinction between personal and enterprise goodwill is fact-intensive, requiring careful analysis of how the business operates, how it was built, and what makes it valuable.

If you’re a professional facing divorce—whether you’re a dentist, physician, attorney, accountant, or other service provider—don’t leave these critical issues to chance. The difference between personal and enterprise goodwill can mean hundreds of thousands of dollars in your final settlement.

Bottom Line:
In South Carolina, the goodwill associated with most professional practices is personal goodwill—not marital property subject to division. But proving this requires presenting the right evidence about how your practice was built, maintained, and valued. Don’t navigate these complex waters alone.

Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. Every divorce case is unique, and the application of legal principles depends on specific facts and circumstances. If you’re facing divorce and have questions about property division, business valuation, or goodwill, please consult with a qualified family law attorney in South Carolina.