Some doctors are surprised to find that their spouse owns an interest in their practice, especially if he or she is not a doctor and has never done anything to benefit the practice at all. Nevertheless, medical practices are no different from other assets and can qualify as marital property. If your spouse is given a share of the practice as part of a divorce, how do you divide it?
In truth, there is no “best” way to divide a medical practice. Instead, we need to look at the facts of the case. Our physician divorce lawyers are prepared to help you if at all possible.
Run The Practice Together, If Possible
If two doctors married, they might have started a joint practice. Getting divorced does not necessarily mean the end of the professional relationship. Instead, you might decide to continue working as business partners even though you own the practice in an individual (as opposed to marital) capacity.
The key will be deciding whether you can continue to work well together. When ex-spouses can’t, they might end up harming the businesses, so be very honest about your ability to work professionally.
Going forward as co-owners has many advantages:
- You don’t have to divide patients
- You can continue to operate out of the same building
- You can continue with the same staff
- You will reduce the cost of overhead by splitting staff and other expenses
Buy-Out Your Ex
If your ex was not a doctor, then there is little sense in having him or her continue ownership of your practice. This can raise a host of ethical issues, also, when a non-professional has an ownership stake in a professional business.
There are many ways to buy an ex’s share. Once the business is valued, you might do any of the following to purchase this share:
- Give an offsetting amount of other marital property, such as retirement accounts, cash, investments, or real estate.
- Use your separate property to buy out your ex’s share in the medical practice.
- Take out a loan to buy out your ex-spouse’s share.
Each of these approaches has pros and cons, which you should discuss with an attorney. For example, by giving other marital property, you won’t go into debt but will exit the marriage with 100% of the practice. However, this might not be an option for those who do not have considerable assets apart from the business.
Using separate property is an easy option, but some might not have enough of that, also. Taking out a loan could be impracticable, depending on your credit and other factors. Meet with your divorce lawyer to discuss different strategies. Ideally, the doctor in the family should own the entire medical practice, which makes running it easier down the road.
Divide Patients & Other Assets
Imagine both spouses are doctors, but they realize they can’t work together and continue their joint medical practice. In this situation, they should divide patients and other business assets. This can be complicated but, for many doctors, it might be the only workable solution.
There are many considerations that go into splitting up a practice:
- Patients should decide which doctor they want to continue to see. You should notify your patients that the practice is splitting, and they should choose a doctor to continue seeing.
- Doctors must exhibit care transferring patient records because many privacy issues are implicated. To maintain continuity of care, records must be complete and accurate and transferred in a way that maintains their security.
- Decide who needs to move their practice to a new location. This is a hassle, full of hidden expenses. You might need to pay realtor fees, application fees, etc.
Doctors splitting up their practice will need to consider staffing issues. The truth is that some staff might prefer one of the spouses and want to go work with him or her. Don’t assume that because you are continuing the practice in the old location that staff will stay with you. They might jump to work with your ex. Consequently, discuss the breaking up of the practice with staff as soon as possible, since you might be in the market for new help.
Speak With A Divorce Attorney Experienced In These Issues
Medical practices take time and effort to build. Do not let all that work go to waste because of a divorce.
At Lawrence Law Office, we have helped many doctors and other professionals navigate divorce so they can exit a marriage with their profession intact. Contact us today to speak with one of our attorneys. All consultations are confidential.