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How Divorce Can Affect your Medical Practice

On Behalf of | Sep 29, 2022 | Divorce

If you are a Texas doctor who is about to get divorced, one of the most critical aspects of your divorce negotiations will be accurately evaluating your medical practice. This aspect of divorce can be challenging to calculate because many doctors practice with other medical professionals. Here are some key elements you should consider.

Factors that affect valuation

When you first meet with your divorce advisers, you can expect them to ask numerous questions pertaining to your practice that will pertain to its worth. Information you’ll have to provide to start the evaluation process includes:

  • The type of group practice entity
  • When it was established
  • Funding
  • If stock was issued to the participants
  • Presence of a buy/sell agreement
  • Possible future vesting of ownership to stock that you would be entitled to after the divorce is final

How to arrive at an accurate valuation

Employing the services of a forensic accountant to examine tangible and financial assets like accounts receivable, office equipment and furniture, and intangibles like goodwill, plus determining liabilities like insurance and taxes can help determine your practice’s worth. Accurately determining your practice’s value is essential because misrepresenting it or deliberately suppressing your income could be considered fraud. Your physician partners should also be aware of your impending divorce as it could become their problem as well.

Preserving your rights during divorce negotiations

Many divorces are complicated, but the more assets you have, the longer divorce negotiations may take. It’s also important that you preserve your rights as much as possible when dividing your assets. Inaccurate valuation of your medical practice assets could land you in legal trouble beyond divorce.

It’s also important to remember that many jurisdictions do not allow a non-physician to own a medical practice. Therefore, if your spouse is not a doctor, you’ll have to relinquish assets that are equal to the value of your practice. Keep in mind that your spouse will probably also have the practice evaluated and that it may result in a compromise.