If you own a professional practice, it may or may not be part of your divorce. This depends on a variety of factors, from the state you live in to the time when the practice was formed. You’ll need to determine your practice’s vulnerability when getting divorced.
A professional practice must be considered marital property if it is to be part of a divorce. This is a rather straightforward situation in most circumstances.
- If the practice was owned prior to being married and your spouse has not been named as part of the practice, it will likely not be a marital asset.
- A practice that is formed after the marriage took place would be considered marital property wherein a percentage of the practice would be owned by the other spouse.
The percentage which may be granted to your spouse will vary greatly. If you started your practice right after med school and you were together at the time, your spouse would have a greater claim to your practice than if the marriage took place years after the practice was formed.
Nine states require equal division of assets, including:
- New Mexico
In most cases, all assets accumulated during the time that the couple was married would need to be split 50-50.
There’s also the case wherein your spouse may be considered a devoted spouse who gave up his or her career to help you grow your practice. In New Jersey, for example, reimbursed alimony may be granted because your spouse help put you through medical school.
Your Practice Is Typically Safe
A divorce proceeding is not meant to destroy your professional practice. Instead, the divorce will determine the value of your practice so that your spouse is given an appropriate financial share of the practice.
The claim is typically against the value of the practice, and not the practice itself.
What this means is that your spouse is not going to be granted a share of the practice, but will be granted monetary compensation based on the value of the practice. You’ll essentially have to buy out your spouse so that he or she is satisfied with the divorce proceedings.
If the practice relies on both of you to run it appropriately, you’ll need to discuss how to proceed with the practice. You’ll likely have the option to buy out your partner, or you can continue to run the practice amicably in a business relationship.
The Micklin Law Group, LLC is a New Jersey law firm specializing in Family Law and High-Asset Divorce. Attorney Brad Micklin was recently named to The National Advocates list of Top 100 attorneys from each state. To set up a consultation, call 973-562-0100.