Medical professionals, dentists, chiropractors, and other healthcare professionals work hard to start their businesses. To thrive, these practices require more than just business management and a deep knowledge of the specialty; these professionals must also establish a good reputation within their community.
A divorce can put this all at risk. Those who own a private practice and are going through a divorce likely have many questions. This piece will discuss some of the more common.
How does the process work?
State law guides the process. Texas is a community property state. This essentially means that most property purchased during the marriage is owned equally by the married couple. Although this may make sense for a property like a family home and bank accounts, it can become more complicated when looking at business interests like a private practice.
How does state law treat business interests?
Texas state law would essentially treat a business interest similar to other assets. This may mean that the court would consider the value of the business interest as community property subject to division during divorce.
How can I protect my private practice?
Those who own a private practice can take steps to protect the practice during the divorce. These can include:
- Prenuptial agreement. For those looking to get married and already have a private practice, it is often wise to have a prenuptial agreement that outlines how a divorce would (or would not) impact the business.
- Postnuptial agreement. Those who start the practice during the marriage or seeking additional protection could consider a postnuptial agreement. This is like a prenuptial agreement but is entered by the couple during the marriage.
- Negotiation. It is also possible to negotiate a trade, essentially a buy-out. Get a valuation of the business interests and offer another asset of comparable value in exchange for full retention of the private practice.
This information provides a starting point for a broader discussion. Additional considerations are important, such as the fact that a non-professional generally cannot have true ownership in the practice. Because these matters are so complicated, it is wise to seek legal counsel to help better ensure all important factors are considered before finalizing a divorce.