Whether you are an architect, accountant, doctor, dentist, or another type of licensed professional, you are not an ordinary business owner. Much of your practice is based upon your skills, personality, and reputation. It is not a business that can run on its own while you manage things from afar or grow without your dedication and hard work. All of this means you may be particularly concerned with how a divorce could impact your professional practice. During your divorce, you will have to navigate your spouse’s potential interest in your practice while protecting it for the future.
Is All or Part of Your Practice Marital Property?
One of the most important questions regarding your professional practice during a divorce is whether any portion of its value or assets is marital property. If you began your practice during your marriage, it is highly likely that all or part of it is considered marital property. A common exception to this is if you and your spouse created a post-nuptial agreement stating the practice was separate from the marital estate. If you opened your practice prior to your marriage, there is a greater likelihood that a portion of it is not part of the marital estate. However, if the value of your practice increased during the marriage, your spouse may have a right to a portion of this appreciation.
Valuing Your Practice
If the court determines your spouse has any interest in the practice, then you and your spouse will need to obtain a value for the business. This requires determining an appropriate business valuation method and working with valuation professionals to obtain an accurate valuation, including your enterprise and personal goodwill.
At Fay, Farrow & Associates, P.C., we will hire business valuation professionals and other expert witnesses to provide evidence to the court of the value of your practice. Keep in mind, your spouse can do the same, putting the judge in the position of choosing which value he or she believes is accurate and fair. This can become a contentious issue because strategically it may be in your best interest to value the business higher or lower.
Dividing the Practice During a Divorce
A court will not make you co-own your practice with your spouse, divide the practice in half, or sell it. Instead, what will likely happen is that you must buy out your spouse’s interest in the practice or your spouse will receive property from the marital estate worth the value of his or her portion. In either case, your spouse is compensated for his or her interest in the business.
Additionally, your professional practice could impact spousal maintenance, also known as alimony. If the court finds your spouse contributed to you obtaining your professional license or building your practice and these contributions were detrimental to his or her own education, career, or earning power, then the court may find alimony is appropriate.
Contact Our Naperville Divorce Lawyers for Advice Today
If you have a professional practice and are going through a divorce, you need a divorce attorney who is experienced in complex business matters. At Fay, Farrow, & Associates, P.C., we have years of experience helping business owners and practitioners protect their hard work and ensure it can grow for years to come.
To learn more about what we can do for you, call us at 630-961-0060 to schedule an initial consultation.