What Happens To A Medical Practice During A Divorce In New York
As a divorce attorney in Fishkill, I’ve helped many clients face the challenges of ending a marriage while trying to protect something they’ve spent years building. If you’re a physician going through divorce, or married to one, one of the biggest concerns is often the fate of a medical practice.
Whether you own the practice, are a partner, or it’s part of your spouse’s career, New York divorce law treats this kind of asset carefully. There’s no simple answer, and the outcome will depend on a mix of financial records, legal analysis, and the unique facts of your case.
In New York, divorce is governed by the Domestic Relations Law, and property division is handled through a system called equitable distribution. That doesn’t mean everything is split 50/50. Instead, it means that the court looks at what is fair, considering a number of factors under Domestic Relations Law § 236(B)(5). A medical practice can be subject to valuation, division, or offset, depending on when it was started, how it was run, and what financial value it holds.
Determining Whether The Medical Practice Is Marital Or Separate Property
The first step in any divorce involving a business is figuring out whether it’s marital property, separate property, or a mix of both. If the practice was started before the marriage, it may be considered separate. But if the business grew during the marriage, or if marital funds or efforts were used to expand it, then some or all of the value may be subject to division.
For example, if you started the practice before marriage but continued to operate and grow it during the marriage, your spouse may have a claim to the increase in value. That’s especially true if your spouse supported you emotionally or financially while you built your career—something courts in New York do consider.
Valuing A Medical Practice During Divorce
Valuation is often one of the most contested parts of a divorce involving a medical practice. The practice must be appraised to determine its fair market value. This includes looking at:
- Tangible assets like the equipment and property.
- Accounts receivable.
- Goodwill and reputation.
- Patient lists and referral sources.
- Future earning potential.
Goodwill, particularly personal goodwill tied to the physician’s reputation, may or may not be considered a marital asset, depending on the circumstances. Under New York case law, personal goodwill is often excluded from equitable distribution, but practice goodwill—especially if it’s transferable or connected to branding—may be included.
Because these valuations are complex, we often bring in independent business valuation professionals who specialize in medical practices. These experts analyze financial statements, billing data, partnership agreements, and tax returns to calculate a value that stands up in court.
Is A Spouse Entitled To A Share Of The Practice?
Your spouse may not end up owning part of the practice, especially if it’s a solo practice or has restrictions under professional licensing laws. New York law (and medical licensing rules) typically prevent non-physicians from owning shares in a professional corporation. But your spouse may be entitled to a monetary award representing their share of the marital value of the practice.
Instead of dividing ownership, courts may offset the value by awarding your spouse a larger share of another marital asset, like the home or retirement funds. This helps avoid disrupting the business while still providing fair compensation.
Handling Medical Records, Confidentiality, And Legal Risks
Divorce involving a medical practice raises concerns beyond finances. You have legal and ethical obligations to protect patient information under HIPAA and New York health laws. During discovery, when financial documents are exchanged, we work carefully to redact or shield patient information to avoid violations.
Court orders may allow certain financial disclosures, but the protection of patients remains a top priority. I always advise physicians to consult with both their legal and professional liability teams during this process.
Frequently Asked Questions
Is My Medical Practice Considered Marital Property In New York?
If you started the practice during the marriage or used marital resources to grow it, it is likely considered marital property. Even if it was started before marriage, any increase in value during the marriage may be subject to equitable distribution under Domestic Relations Law § 236(B).
Will My Spouse Get A Share Of My Practice?
Usually, your spouse won’t receive ownership in the practice itself due to licensing restrictions. Instead, they may receive a financial award based on the value of the marital portion of the practice.
How Is A Medical Practice Valued During Divorce?
A valuation expert will analyze financial documents, patient income, goodwill, and other assets. The value of the practice is determined based on its fair market value at the time of divorce, minus any separate property portion.
Can My Medical License Be Affected By Divorce?
Divorce does not directly impact your license, but failure to comply with court orders—like support payments or disclosure obligations—can lead to sanctions that could affect your professional standing.
Will My Spouse Have Access To Patient Records During Divorce?
No. Patient privacy is protected by HIPAA and state law. Any financial discovery must be handled with care to avoid revealing identifiable patient information.
What Happens If The Practice Is A Partnership Or Group Practice?
Your interest in a partnership may still be marital property. However, partnership agreements often include clauses that limit how ownership can be transferred or valued. We review those agreements carefully as part of the legal strategy.
Can Income From The Practice Affect Spousal Support?
Yes. Income from a medical practice is a key factor in determining spousal and child support. Even if the practice itself isn’t divided, the earnings may impact the court’s support decisions.
How Long Does A Divorce Involving A Medical Practice Take?
These cases often take longer due to the time needed for valuations, financial analysis, and expert reports. We work to move the process forward efficiently while protecting your interests.
What If I Signed A Prenuptial Agreement About The Practice?
If there’s a valid prenuptial or postnuptial agreement, the court will review its terms under New York law. If the agreement clearly defines the practice as separate property, that can simplify the outcome.
Can I Settle Out Of Court To Keep The Practice Private?
Yes. Many of our clients choose to resolve issues through private settlement or mediation. This helps keep the details of the practice out of the public record and gives you more control over the outcome.
Contact Our Reputable Divorce Attorneys In Fishkill Now
At Jonna Spilbor Law, we understand that your medical practice is more than just a business—it’s the result of years of dedication. Whether you’re trying to protect your practice or assert your rights as a spouse, we can help you understand your legal options and work toward a fair outcome.
Contact our Fishkill divorce attorney at Jonna Spilbor Law today for a free consultation at (845) 485-2529. We represent clients throughout Dutchess County, Putnam County, the Hudson Valley, and New York City.
