The value of a medical practice in a physician divorce

When a physician gets a divorce in Indiana, evaluating the value of the practice will be one of the most complex but important parts of the process. In most cases, both spouses will have a forensic accountant who will appraise the practice.

Understanding the Practice’s Value

In order to assess the value of the practice, forensic accountants will look at all assets including furniture, office equipment and the lease. This process may also involve figuring out the intangible value of goodwill as well as looking at liabilities. These could include taxes and insurance costs. It is not uncommon for each person’s accountant to arrive at very different figures, and this can lead to challenges by each person’s attorney.

Considerations in Dividing the Practice

In many jurisdictions, it is not legal for a nonphysician to own a medical practice. This means that while in many divorces, a settlement might allow the nonowning spouse to own a portion of the business after the divorce, this is not possible in a physician divorce. Therefore, once the value of the business has been agreed upon, the couple may need to decide what the financial settlement will be, or a judge in a family law court will determine. A potential further complication is that the physician may have an agreement with partners that a divorce means forfeiting any stock in the practice.

Other types of business owners will also need to go through an appraisal process. While there might not be the same prohibition on the ex-spouse owning a part of the company, the partners themselves might have an agreement that prohibits this from happening if one of them gets a divorce. If spouses co-own a business, one might buy the other out, or they may agree to sell the business and split the proceeds.