Dividing a Medical Practice in a Divorce
A divorce typically will divide both the marital assets and debts. However, if one spouse owns a medical practice, such as a doctor’s office, dentist office, or chiropractor office, the division of this asset can prove more challenging. Building any type of business is typically a life endeavor, especially medical practices, and is likely one of the marriage’s largest assets. Knowing how a medical practice is divided in a divorce can help you understand your rights, and what you may be entitled to.
Value Determination
In order to be divided in the divorce, the initial step must be to determine the value of the medical practice. A valuation of a medical practice will always include both the tangible and intangible components of the business. Oftentimes a valuation expert is needed to provide an expert opinion regarding the evaluation of any physical property or equipment, financial records, intellectual property, the appreciation of the business over the course of the marriage, as well as professional and personal goodwill regarding the business.
Additional considerations will also need to be determined regarding when the medical practice began. If the professional practice started before the marriage began, there may be a possibility that it is not a marital asset it if was excluded in a prenuptial agreement. Other circumstances can also prevent the full value of the business from being divided as an asset in a divorce. Visiting with an experienced divorce attorney can help you understand how to value and divide this financial asset.
Keeping the Professional Practice Open for Business
After a final determination has been made regarding the valuation of the medical practice, the spouse will likely want to keep their medical practice in operation, and not shut down or force a sale. At this point, the valuation has been determined, and the court will look at all assets and make a determination regarding dividing all assets, including the medical practice.
One way a medical practice is divided is through a process called a “buy-out.” The owner of the medical practice will essentially “buy-out” the non-owner spouse’s portion determined by the court. This allows the medical practice to stay in operation. Oftentimes, if the medical professional spouse does not have enough savings to “buy-out” the other spouse, creative solutions can be found including looking at the equity of the marital home, or even allowing one spouse to make payments to the other.
Contact a Family Law Divorce Attorney
If you are considering divorce, and have a medical practice, or your spouse has a medical practice, you may be wondering how this large asset will be divided in the divorce. Valuation experts may be needed, and the full process can be quite extensive. The experienced Las Vegas divorce attorneys at Ghandi Deeter Blackham Law Offices can help you determine how a medical practice can be included in the assets of a divorce, and how it can be equitably divided. Please contact one of our attorneys at 410-535-5500 today for your free consultation.
Resources:
sba.gov/sites/default/files/articles/Business_Appraisal_-_November_29_2016_-_ver_3.pdf
irs.gov/irm/part4/irm_04-048-004
https://www.ghandilaw.com/divorce-mediation/
