Divorce for Physicians & Their Spouses

Divorce Considerations for Physicians or Their Spouses

Divorce, with its financial and emotional turbulence, can be a difficult undertaking for any person. Adding the complexity of owning a medical practice, or an interest in a medical practice, creates an additional layer of concern for a licensed physician or other medical professional.

In Texas, a non-practitioner often cannot own a practice. This means spouse of a doctor would not be able to be awarded the medical practice even if there were a logical and non-confrontational way of doing that. What typically happens is the non-physician spouse is compensated for their community portion of the medical practice. What that community portion value equates to in money to be paid to the non-physician spouse depends on a variety of factors.

How is a medical practice valued?

One of the most important parts of handling a medical practice in a divorce is determining its value. This can be a complex process as each practice is unique and each field of medicine and geographic market are different. A business valuation must look at the actual assets (property/medical equipment), review intangibles such as contingent fees, outstanding money owed, trademarks/copyrights, and look at the debts of the business.

Typically a qualified accountant or business valuation expert will come in, review the practice and estimate the value the purpose of the divorce. If the parties do not agree to the value then the parties may each use their own business valuation expert.

Attorney Ramos was recently successful at a trial with dueling valuation experts. The non-physician spouse and their expert asserted the value of a medical practice to be at $500,000.00 while the Ramos Law Group and its expert asserted it was closer to $60,000.00. After a lengthy jury trial, the jury sided with our firm and found the practice to be worth $60,000.00. This resulted in our client paying less to their spouse and ended up being a great deal and a fair outcome.

What is goodwill?

A factor to be considered when calculating a business valuation is the goodwill of the business. This is based on intangible factors such as business reputation and referrals. Goodwill often does not have any value without the physician or group of physicians it stems from. Goodwill is entirely fact specific so a licensed Texas family law attorney will be able to review the facts of your case and let you know how much value your specific goodwill has.

Is there a buy/sell agreement in place?

Very few medical practices these days are solely owned. Many medical professionals are in group practice and a common feature in a group practice is a buy/sell clause. This provision will give the other physician-owners the right to buy any shares or membership interests a divorcing owner would otherwise grant their ex-spouse. This could have implications on the overall divorce settlement, so if you are a physician in a group practice that has such an agreement it is important to consult with a divorce attorney who can analyze this and provide feedback on how it may affect your divorce.

The Ramos Law Group Standard

The Ramos Law Group has experience in zealously advocating for its medical professional clientele. In one specific instance, Attorney Mary Ramos was able to successfully present evidence in a jury trial as to the value of a doctor’s practice. The other side projected a much higher value (which would result in their client obtaining more money) but the Ramos Law Group was able to obtain a judgment for the physician client that was correct and fair. The attorneys at the Ramos Law Group have a wide-breadth of experience and attention to detail that result in our medical professional clients consistently getting good property divisions at court.

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