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How to handle divorce and your medical practice in California

On Behalf of | Dec 2, 2022 | Family Law |

In California and many other states, all assets and liabilities acquired during the marriage or the appreciation in separate property brought about by the other partner are all subject to division during divorce. If you have a medical practice, your partner may be able to claim a share as part of your divorce settlement.

California divorce laws

Property division is an integral part of a divorce in California. The family law judge must ensure that each party has their rightful share of the marital assets. California is a community property, meaning the court splits all marital property equally regardless of your partner’s contribution to the acquisition of the asset.

The division of medical practice in divorce

A medical practice is typically treated as community property, and both spouses will share in its value during a divorce. For the judge to order a fair split, he or she may require an appraiser to value all marital assets, including your medical practice. The main areas of focus include:

Business goodwill
• Equipment
• Assets
• Liabilities and debts
• Profitability

Key factors that may affect the split

If you started your practice before your marriage, it’s still subject to division. However, some courts may consider the length of time you have been practicing and other factors that may lead to an unequal division. If one spouse has contributed significantly by working in the practice or managing its finances, for example, a judge may award them a larger portion when deciding how to divide the medical practice or may let them be the final decision maker when it comes to running the business.

A marital agreement may also impact the split. However, a judge may fail to honor an agreement if it seems unfair to your spouse or if they signed it without adequate legal representation.

If you and your partner decide to stay on as business partners after the divorce, it’s important to have a detailed plan in place that outlines each party’s responsibilities and their share of profits. This can help prevent any issues from arising down the line. Additionally, ensure that your agreement is legally binding and incorporates all the terms the judge decided in court. If that can’t work, you can choose to buy your spouse’s share of the practice or sell it and split the proceeds.

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