How to Divide Dental Practices When Tennessee Dentists Divorce
Dividing dental practice value when a Tennessee dentist divorces.
How to Divide Dental Practices When Tennessee Dentists Divorce
In Tennessee divorce law, the value of a dentist’s dental practice can be determined and valued.
When dentists divorce in Tennessee, courts examine a number of factors in determining how to divide the marital estate. Some factors the court will consider include the age and health of each party, the earning capacity of each party, the contributions of each party to the marriage, and the future earning ability of each party. Tennessee courts will often include a dental practice as part of a marital estate. This article discusses three divorce cases that involve dentists who owned dental practices in Tennessee.
Dr. Eberting met his wife while he was in dental school and she was in law school. Eberting v. Eberting, No. E2010-02471-COA-R3-CV (Tenn. Ct. App. 2012). Both parties were in the Navy at the beginning of the marriage, and Dr. Eberting eventually opened a orthodontic practice. Dr. Eberting testified that he drew an annual salary of $225,000 from his practice. He also drew personal expenses from his business account. These expenses included clothing, weight loss programs, haircuts, meals, University of Tennessee football tickets, and massages. Dr. Eberting was heavily involved in civic activities and became seriously devoted to a number of hobbies. He participated in the American Association of Orthodontists, the Rotary Club, a local theater group, the local library board, and a local business leadership group. He also flew planes, ran marathons, participated regularly in karaoke, and went to concerts. Dr. Eberting only worked three days a week, and would take two-hour lunch breaks. He admitted using these lunch breaks and days off to commit numerous extramarital affairs. Dr. Eberting also admitted to searching for women on the internet.
Due to his personal commitments, Dr. Eberting had difficulty becoming involved in his children’s schoolwork and extracurricular activities. He left his children sitting in the car on two successive nights for four hours while he practiced for a play. Dr. Eberting also made an offensive remark to his daughter about her weight in front of her friends at a soccer practice. Mrs. Eberting, who worked as a city attorney, filed for divorce after fourteen years of marriage. The trial court granted the divorce and awarded Mrs. Eberting 50% of the marital estate, primary custody of the children, transitional alimony of $1,000 per month for ten years, and attorney’s fees of $150,000.
Dr. Eberting appealed the trial court’s valuation of his orthodontic practice, parenting plan, and award of attorney’s fees. Mrs. Eberting appealed the overall property division and the amount awarded for attorney’s fees. The Tennessee Court of Appeals affirmed the trial court’s original award.
Dr. McKee met her husband while she was completing a graduate program in pediatric dentistry. McKee v. McKee, No. M209-01502-COA-R3-CV (Tenn. Ct. App., 2010). At the time Dr. McKee started her dental practice, married females were unable to obtain loans without a husband co-signing. Mr. McKee helped Dr. McKee obtain a number of loans that allowed Dr. McKee to expand her practice. Both parties were well-educated, and at the time of trial, Mr. McKee earned $81,362 per year in the banking industry. Dr. McKee’s practice was profitable, and her annual income of $524,280 greatly exceeded her husband’s. Towards the end of the marriage, Mr. McKee had a continuing and open relationship with another woman. Mr. McKee and his mistress openly resided in a vacation home in Sewanee, Tennessee that was owned by Dr. McKee. After twenty-four years of marriage, Dr. McKee filed for divorce, claiming irreconcilable differences and inappropriate marital conduct. Dr. McKee claimed that she served as the primary homemaker, wage-earner, and caretaker to the parties’ two children, while her husband spent most of his free time partying, going to concerts, and drinking with friends. Dr. McKee also claimed that Mr. McKee was verbally and physically abusive, and routinely humiliated her in front of friends and family.
The trial court adopted Dr. McKee’s proposed division of marital assets, and awarded Dr. McKee 80% of the assets and Mr. McKee 20%. Noting that Mr. McKee “played, partied, and failed to account for his earnings” while Dr. McKee “built her business, paid the vast majority of all expenses, provided most of the care for the children and saved her money,” the trial court awarded Dr. McKee all assets titled in her name and all jointly titled real property. The trial court also denied Mr. McKee’s request for $10,000 in monthly alimony payments. In total, Mr. McKee received $750,122 in assets and Dr. McKee received $2,238,637 in assets. Mr. McKee appealed the trial court’s decision, claiming that the court erred in its division of marital assets, denial of alimony, and valuation of Dr. McKee’s dental practice.
The Tennessee Court of Appeals affirmed the holding of the trial court. Mr. McKee claimed that his standard of living during the marriage, coupled with his position as an economically disadvantaged spouse, entitled him to alimony payments. However, Mr. McKee’s failure to participate as a homemaker or caretaker for the parties’ children was detrimental to his argument. The Court also considered Mr. McKee’s alleged physical and verbal abuse, as well as his decision to live openly with his mistress in the Sewanee vacation home. Finding that Mr. McKee never truly suffered any economic detriment to contribute to the household during the marriage, the Court of Appeals denied Mr. McKee’s request for alimony payments and a redistribution of the marital estate. Dr. McKee kept the Sewanee vacation home, along with a great majority of the marital assets.
Dr. Elkins met his wife while he was attending dental school and his wife was attending dental hygiene school. Elkins v. Elkins, 1999 WL 1076940 (Tenn. Ct. App. 1999). Mrs. Elkins worked as a home economics teacher before the parties were married. During the early years of their fifteen year marriage, Mrs. Elkins worked as a dental hygienist at Dr. Elkins’ dental practice. Doctors diagnosed Mrs. Elkins with Hepatitis C, which she likely contracted while she worked at her husband’s office. Mrs. Elkins also suffered from migraine headaches and fibromyalgia. Doctors gave Mrs. Elkins an 80% chance of going into chronic liver disease or liver failure. Mrs. Elkins stopped working as a dental hygienist after she was diagnosed with Hepatitis C. At trial, Dr. Elkins presented an expert rehabilitation counselor who testified that Mrs. Elkins could earn a living as a teacher or a dental hygienist. Dr. Elkins earned more than $120,000 per year at his dental practice.
The trial court awarded rehabilitative alimony to Mrs. Elkins for a period of four years, in monthly amounts between $2,500 and $3,250. The value of the dental practice was split between Dr. Elkins and Ms. Elkins. The trial court also totaled the debts Ms. Elkins acquired after the separation of the parties, and required Dr. Elkins to pay one-half of the debts. Dr. Elkins appealed the trial court’s decision. The Tennessee Court of Appeals found that Ms. Elkins could not be rehabilitated due to her illnesses and awarded her $2,500 per month in futuro alimony payments. In its opinion, the Court observed that Dr. Elkins was able to spend “lavishly” on his girlfriend with his $120,000 annual income. The Court of Appeals affirmed the trial court’s decision to require Dr. Elkins to pay one-half of the debts incurred by Ms. Elkins after the parties separated. Noting that Mr. Elkins was inconsistent in his marital obligations after the separation, the Court of Appeals found that Ms. Elkins was frugal in her spending habits and never “squandered” marital funds.
As these cases illustrate, Tennessee courts often use marital property and alimony as tools to enable the disadvantaged spouse to achieve the standard of living to which the spouse was accustomed to during the marriage. This is true particularly when one spouse is in poor health. In cases of adultery, Tennessee courts may adjust alimony awards to reflect the fault in causing the divorce.
For more information about division of professional practices, see Valuing Professional Practices and Valuing a Dentist’s Dental Practice Under Tennessee Divorce Law.
Memphis divorce lawyer, Miles Mason, Sr., JD, CPA practices family law exclusively and is founder of the Miles Mason Family Law Group, PLC, in Memphis, Tennessee. He authored The Forensic Accounting Deskbook: A Practical Guide to Financial Investigation and Analysis for Family Lawyers, published by the American Bar Association. Miles is past Chair of the Tennessee Bar Association Family Law Section and is a prolific author and public speaker on divorce trial practice presenting seminars to attorneys, forensic accountants, and business valuation experts.
