Divorce and your medical practice

The Impact of a Divorce on Your Private Medical Practice

The divorce rate among all physicians is 21.8%, which is lower compared to many other occupations. Scientists theorize that physicians marry later and spend more time choosing their spouses. However, when your marriage has come to an end, and you’re a practicing physician who owns a medical practice, speaking with a divorce lawyer will help you know how to protect your reputation, finances, professional reputation and future.

Evaluation of the Medical Practice

You will have some questions to address during your initial consultation with a divorce lawyer. These relate to the evaluation of your medical practice. Your lawyer may inquire about when the practice began to determine if you had it before your marriage or started it after your wedding. You may also need to answer questions about the type of entity your practice is under IRS regulations, how you funded the practice, whether or not there are co-owners and if shares were issued, if there is a buy/sell agreement in place, and if there are future vesting or stock options that others would be entitled to if you were to stay married. Remember that your soon-to-be ex-spouse may hire a forensic accountant to dispute your accountant’s findings.

Determine the Practice’s Assets and Liabilities

As the owner of a medical practice, you will want to work with a forensic accountant to categorize its assets and liabilities, and your divorce lawyer will need this information. This will include the list of long-term patients, office equipment, the building if you own it, accounts receivable and furniture. Your medical practice’s liabilities include rental or mortgage payments, equipment payments, taxes, payroll, insurance, retirement contributions, employee benefits and loans.

Evaluation of Your Income From the Practice

Working with a forensic accountant will also help determine if you’ve been getting a fair income from your medical practice. Many physicians only take a small salary and reinvest their earnings into their practice. The accountant may evaluate your income compared to other physicians within the same field and your income compared to other physicians who work in the same specialty and have the same level of experience.

Regulations Pertaining to the Ownership of Medical Practices

According to Pennsylvania law, only a physician can own a medical practice or be a shareholder in one. Because of this, your non-physician spouse can’t be awarded any ownership interest in the practice in your divorce settlement. Therefore, while the court will consider the value of the practice when approving the settlement, ownership will not be on the table.

Contracts Between Physicians Within the Practice

Another consideration for the future of your medical practice after a divorce is the terms of the contracts you have with other physicians in the practice. Some medical practices have contract stipulations requiring that if one member gets a divorce, they forfeit their stock. This stipulation is for the protection of the other members. Some contracts might allow you to repurchase your stock after a certain period, but this could allow your ex-spouse to protest the settlement and take you back to court.

If you’re a practicing physician and a divorce is in your future, a consultation with a lawyer could help you understand how divorce could impact your medical practice. For more information about the impacts of a divorce on your medical practice, schedule a consultation with the Law Office of Joanne Kleiner in Jenkintown, Pennsylvania by calling us at (215) 886-1266. Our quick contact form also enables you to request a consultation. Complete and submit the form, and an office associate will be in touch with you.