When doctors in Connecticut and around the country go through a divorce, determining how much their medical practices are worth and whether their businesses are separate or marital property are usually among the most difficult issues to resolve. Things are relatively simple when the doctor is a sole proprietor who started practicing medicine after getting married, but matters are a lot more complicated when they are one of several partners and were practicing long before they walked down the aisle.
Placing a value on a medical practice
Determining how much a divorcing doctor’s medical practice is worth often requires the assistance of forensic accountants who specialize in this area. However, negotiations may become contentious when both spouses hire forensic accountants who reach different conclusions. When this happens, the disagreement usually centers around the value of intangible assets like goodwill. Once a figure has been agreed on, the next challenge is determining whether or not the practice is a marital asset. A practice owned by a physician before they married would normally be considered separate property in a divorce, but that is not always the case. If the other spouse contributed to the business in some way or sacrificed a career to raise children so their husband or wife could practice medicine, at least part of the practice would likely be considered a marital asset.
Dividing a medical practice in a divorce
The laws in Connecticut call for marital property to be divided equitably in a divorce, but that may not be possible with a medical practice. That is because Connecticut law also prohibits individuals without a physician’s license from owning businesses that provide medical services. The most common ways this issue is resolved include the physician buying out the non-physician, the physician offering assets like real estate in return for the non-physicians share of the practice, or selling the practice and dividing the proceeds.
Prenuptial agreements
Property division negotiations are rarely easy, and that is especially true when one of the assets being discussed is a medical practice. Disagreements over the value of goodwill and other intangible assets, the nebulous rules dealing with separate property and laws preventing non-physicians from owning medical practices all complicate matters, and compromises may have to be made by both spouses before these issues can be resolved.