How will divorce impact my private practice?

On Behalf of | Aug 14, 2023 | Property Division |

Physicians who choose to own a private practice are taking on more than just patients. They are taking on the need to delegate administrative and business duties and navigate the legalities of running a medical business. This is all in addition to managing patient care. With all this in mind, it may seem frustrating that divorce could impact the practice you worked so hard to build. Having a basic understanding of how the divorce can affect the practice can help you to take the steps you need to better ensure minimal impact.

The location of the divorce matters.

Divorce is a family law issue, governed by state law. That means it may progress through the legal system differently in each state.

California is a community property state. As such, each spouse owns an equal portion of all marital assets. When it comes to traditional businesses, this can mean that the non-owning spouse has a right to half of the business, but this is not always true regarding a medical practice. This is because, in California, only physicians can own a medical practice.

Divorce can still impact a medical practice.

This does not mean the medical practice will remain untouched by the divorce. Although not directly impacted, other tertiary effects can include:

  • Valuation. The division of assets when a private practice is involved includes more than just a review of the physician’s income — it also includes the worth of the practice. Getting an accurate valuation of the practice is important to help guide negotiations. This process generally requires a deep dive into the practice’s financials and goodwill.
  • A shift in financial stability. The practicing physician will likely need to propose other assets of similar value in exchange for the retention of the private practice during the divorce. If not done wisely, this can result in some financial instability. Physicians can account for this risk by including a mix of liquid assets and investments in the final split.
  • Distraction. It is very difficult to stay focused when going through a divorce. Although there are various tips to help remain productive at work, it is important to realize that the divorce may translate to a dip in productivity. Try to account for this and take steps to mitigate any adverse effects to your practice.

Other factors, like how long you owned the practice before the marriage, can also play a role in these discussions.

There are ways to better ensure the business continues smoothly, even during divorce. An attorney experienced in these high-asset matters can review your situation and discuss the best strategies to help protect your practice as you navigate a divorce.


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