Protecting Your Medical Practice During Divorce Proceedings In New York
Divorce is a high-stakes legal process, but when one or both spouses own a medical practice, the stakes become even higher. In New York, professional practices are considered marital assets, making them subject to equitable distribution laws under Domestic Relations Law § 236(B). If you own a medical practice, protecting your business, income, and future financial stability should be a top priority.
Dividing a medical practice in a divorce involves complex legal and financial considerations. The value of the practice, the role of each spouse, and whether the business was established before or during the marriage can all impact the outcome. Taking proactive steps to secure your practice from the beginning of the divorce process can help protect your livelihood and financial well-being.
Is A Medical Practice Considered Marital Property In New York?
Under New York’s equitable distribution laws, any business or asset acquired during the marriage is generally considered marital property—even if only one spouse operates the business. A medical practice is no exception. Even if the practice was started before marriage, any increase in its value during the marriage may be subject to division.
Factors that determine whether a medical practice is marital or separate property include:
- When the practice was established – If you started your practice before marriage, some portion of it may remain separate property, but any growth in value may be marital property.
- Contributions from the spouse – If your spouse contributed to the practice in any way—through financial support, administrative work, or making career sacrifices—they may have a claim to a share of its value.
- Valuation of the practice – Determining the current and future value of the practice is critical in dividing marital assets fairly.
Valuing A Medical Practice In Divorce
Accurately valuing a medical practice is one of the most contentious issues in a divorce. Courts often rely on forensic accountants and business valuation experts to determine a practice’s worth based on:
- Revenue and profit history
- Goodwill and reputation in the community
- Equipment, real estate, and other business assets
- Outstanding debts and liabilities
- Projected future earnings
If you want to protect your business, it is essential to have an experienced attorney challenge overinflated valuations and ensure a fair assessment.
Strategies To Protect Your Medical Practice
Prenuptial Or Postnuptial Agreements
A prenuptial or postnuptial agreement is one of the most effective ways to protect a medical practice in the event of a divorce. A well-drafted agreement can:
- Specify the practice as separate property
- Determine how business assets will be handled
- Outline financial obligations to a spouse
If you do not have a prenup, there are still steps you can take to safeguard your business.
Buy-Sell Agreements And Shareholder Agreements
If you own a medical practice with partners, a buy-sell agreement can restrict ownership transfers. These agreements can prevent a divorcing spouse from gaining control or forcing a sale of the business.
Keeping Business And Personal Finances Separate
Avoid commingling marital and business finances. If business profits are deposited into joint accounts, it may be harder to argue that the practice is separate property. Keeping clear financial records can help support your case.
Offering A Buyout Or Alternative Compensation
Instead of dividing the practice, you may be able to buy out your spouse’s interest. Other financial arrangements, such as trading assets or structured payments, can help you retain full ownership.
New York High Net-Worth Divorce Frequently Asked Questions
Can My Spouse Claim Part Of My Medical Practice Even If They Never Worked In It?
Yes, under New York’s equitable distribution laws, a spouse may have a claim to a portion of the practice’s value even if they did not directly work in it. If the practice grew in value during the marriage or if your spouse made non-financial contributions (such as supporting your education or managing household responsibilities), they may be entitled to a fair share of the business assets.
How Is The Value Of A Medical Practice Determined In A Divorce?
The value is typically assessed by forensic accountants or business valuation experts. They consider factors such as gross revenue, expenses, goodwill, and potential future earnings. The court may also consider tangible assets, such as equipment and office space, as well as intangible assets, like the practice’s reputation.
Can I Protect My Medical Practice If I Started It Before Getting Married?
Yes, but only the portion of the practice that existed before the marriage is considered separate property. Any increase in value during the marriage could be subject to division. Having clear financial records and legal agreements can help protect your business.
Can A Medical Practice Be Sold As Part Of A Divorce Settlement?
In some cases, a court may order a practice to be sold or liquidated if there are no other viable options for equitable division. However, most courts prefer alternative solutions, such as a buyout or asset exchange, to avoid disrupting the business.
What Would Happen If My Spouse Helped Finance My Medical Education?
If your spouse contributed financially to your medical education or supported you during training, they might be entitled to reimbursement or additional compensation during the divorce. Courts often recognize these contributions as investments in the marriage that warrant fair compensation.
Can I Prevent My Spouse From Gaining Control Of My Practice?
Yes. A buy-sell agreement, prenup, or postnuptial agreement can restrict a spouse from acquiring ownership rights. If these protections are not in place, negotiating a buyout or asset exchange is often the best strategy.
Should I Continue Operating My Practice During The Divorce?
Yes. Shutting down or neglecting your practice during a divorce can negatively impact its value and financial standing. Maintaining normal operations can help preserve the business’s worth and make negotiations easier.
What If I Co-Own The Practice With Other Doctors?
If you share ownership, a partnership or shareholder agreement may outline how divorces are handled among partners. Courts typically do not force business partners to split ownership, but your spouse may be entitled to financial compensation based on your share of the business.
Can A Divorce Affect My Medical License Or Credentials?
Divorce itself does not affect a medical license, but financial disputes related to child support, spousal maintenance, or unpaid debts could result in legal consequences. It is critical to resolve financial matters promptly to avoid complications.
Get The Best Advice At The Best Price
Protecting a medical practice during divorce requires strategic planning and aggressive legal representation. At Jonna Spilbor Law, we understand the unique challenges that physicians and medical professionals face when dividing business assets in a divorce. We are committed to protecting your livelihood and securing a fair outcome.
For compassionate and experienced legal support, contact our Fishkill divorce attorney at Jonna Spilbor Law by calling our Fishkill office at (845) 485-2529 to receive a free consultation. We represent clients throughout the Hudson Valley, Dutchess County, Putnam County, and New York City. Let us help you protect what you have built.
