Years of education, a great amount of finances and hard work go into becoming a physician. Even more effort is put into the creation of a medical practice. Could all of the hard work and dedication contributed toward establishing a practice be compromised in the event of a divorce? There are a number of factors and scenarios that can determine the future of a medical practice when a practice owner divorces.
Was the Practice Established Before or After Marriage?
One of the biggest factors in determining what happens to a practice after a divorce is to identify when it was established. A medical practice would be considered community property if founded during the marriage as opposed to before. Texas is a community property state, meaning that assets acquired by both spouses during marriage, with community property, are required to be divided, as the property belongs to both spouses. A practice that was started during a marriage can be more complex to navigate than a practice that existed prior to the marriage.
If a Person Marries a Physician with a Medical Practice
Another large component that may determine the fate of a practice after a divorce is the amount of involvement both spouses contribute to the medical practice. If one spouse has founded and operates the business and the other spouse isn't involved in the business affairs, numerous elements would be considered when deciding how much the uninvolved spouse is entitled to, including:
- The length of the marriage
- The uninvolved spouse's career & income
- Any contributions made to the practice by the uninvolved spouse
For this type of situation in which one person marries into a medical practice, asset division may be more straight-forward for the involved parties since the practice might not be considered community property.
What if Both Spouses are Physicians Involved in the Practice?
The outcome is then dependent on a few factors. Did one spouse marry a physician with an existing practice and then become a partner in the practice? Did two physicians get married and later decide to start a practice together? Did two existing practice owners fall in love and marry and continue the practice after marriage? These different scenarios will play a factor in how, and if, the practice will continue to operate once the divorce is finalized. In addition, the outcome is also reliant upon how the physicians are employed. One of the more simple conclusions might include a division of the practices' assets, a possibility if both physicians began together as partners.
Valuation of Practice Assets
Determining who gets what, and how much, goes far beyond the practice itself. Assets related to a medical practice can include real estate, multiple offices, equipment, technology and intangible assets such as person and/or enterprise goodwill. Making sure your practice gets a comprehensive and definitive valuation is essential to a fair outcome for both spouses. Involving credible experts in the legal process is one way to ensure how much a practice and all assets involved can be valued and divided.
Although these are just a few examples of what can happen to a medical practice during divorce, each case is different and possesses its own unique elements that will help establish the future of the practice. Our firm offers knowledgeable legal representation with over 25 years of experience and dealing with the complex issues presented by a medical practice in divorce. Contact the family law attorneys of Hendershot, Cannon, Martin & Hisey, P.C. today.