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Splitting a Medical Practice Due to Divorce

It’s common to face challenges if you’re getting divorced and need to address ownership interests in a business. Applying Texas asset division laws to a company is more complicated as compared to splitting other property, such as real estate or a vehicle. However, if the business at issue is a medical practice, there are additional layers of complexity. Dividing ownership interests under such circumstances encompasses numerous statutes, drawing from laws on divorce, corporations, and professional practices.

While you should always count on a Texas physician’s divorce lawyer to assist with the details of your specific situation, you might benefit from reviewing some general information on splitting a medical practice in divorce.


Default Rules Regarding Asset Division in Texas Divorce: In a community property state like Texas, all property you acquire during your marriage is considered marital property; any items you own before getting married, received as a gift, or inherited are termed separate property.

The distinction between community property and separate property is important because of how the items are treated in the event of divorce. Only community property is subject to equitable distribution between the parties when ending their marriage. Note that “equitable” doesn’t necessarily mean a 50/50 split since courts will also take into account the interests of fairness to each spouse and their children when dividing marital assets.

In addition, keep in mind that spouses are free to enter into an agreement regarding asset division, which supersedes some of the default divorce rules. Some couples opt to do so before getting married through a premarital agreement. You can also negotiate a compromise after you’ve already filed for divorce, and the agreement would become part of your final decree. For instance:

  • Spouses can designate certain assets as being community property or separate property, even if they would qualify as the opposite under Texas divorce laws;
  • With respect to community property, the parties can state their intentions regarding a division of assets that departs from the equal or equitable rules; and,
  • The parties can include provisions regarding spousal support in a premarital agreement.


Special Considerations for Handling a Medical Practice: Though Texas community property rules still apply, there are some factors that require special attention when it comes to dividing ownership in a medical practice.

  • Ownership of the Practice: Your approach to dealing with a medical practice in divorce depends upon whether it’s a solo or partnership practice, as well as when it was established.
  • Valuation: Determining the net worth of the medical practice is a key factor because the organization encompasses more types of property than you might expect. Beyond the physical assets, such as real estate, vehicles, and office equipment, you must place a value on the goodwill and existing patients. Plus, you’ll need to include all debts, financial obligations, and existing contracts to which the organization is a party.
  • Texas Corporate Practice of Medicine (CPM) Rule: Even if you overcome the hurdles involved with complex ownership and valuation, the CPM rule may limit your options in splitting a medical practice. This doctrine prohibits a person or entity from running such a business unless they have proper medical licensing.


Options for Splitting a Medical Practice in the Divorce Process: Though your options may seem limited, there are strategies to divide a physician practice that may suit your needs. Besides entering into an agreement as described above, you may consider the following:

  • If both spouses are licensed physicians, the CPM doctrine does not apply. You have more freedom to divide the business equally.
  • When the CPM rule prevents one spouse from owning the practice, there are advantages to selling it to a third party and splitting the proceeds.
  • The medically licensed party can buy out the other spouse in the divorce. Doing so typically requires you to address how other community assets are distributed, as well as issues related to spousal support, custody of minor children, and other relevant factors.

Rely on a Texas Physicians Divorce Attorney to Assist with Splitting Your Medical Practice

From the above, you can see the importance of retaining solid legal counsel to assist with divorce when a key asset is an ownership interest in a medical practice. You’ll probably also realize that it’s critical to work with a lawyer who has a specific focus dealing with physician divorce. Our team at The Ramos Law Group, PLLC is committed to guiding clients through the divorce process, including cases where there are concerns or disputes about dividing a medical practice. To learn about our services in this unique, niche area of law, please contact our office to set up a consultation.

Last Updated on May 11, 2022 by Mary E. Ramos

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Mary E. Ramos

Mary E. Ramos is Board Certified in Family Law by the Texas Board of Legal Specialization. She is recognized and respected throughout the Houston legal community for dedication in effectively representing clients’ rights and interests. Mary understands the emotional side of divorce and brings a special compassion to each and every case.

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