What Happens to a Spouse’s Professional Practice in a Divorce?

 Posted on June 04,2021 in Illinois Divorce

Business assets of any kind can complicate the divorce process, but professional practices present a set of challenges all their own. When a doctor, lawyer, therapist, or any other licensed professional owns their own practice, the business’s success is closely tied to the owner’s efforts. The owner typically relies on the business as their primary livelihood. This can make fairly valuing and dividing the practice during divorce quite difficult. If you or your spouse operates a professional practice, you should be aware of what to expect during the divorce process.

Is the Practice Marital Property?

You might assume that a professional practice belongs only to the spouse who founded it, but in reality, this depends in large part on when the practice was established. If it was already in existence before the marriage began, it will most likely be excluded from the marital estate. However, if the practice was established during the marriage, it will most likely be considered marital property for which both spouses could have a claim during the divorce process.

This issue can be more complicated if you have invested marital assets in a professional practice that would otherwise be considered non-marital property, or if your spouse has contributed to the practice’s success through their own personal efforts. Even if the practice retains its non-marital status, you may need to reimburse your spouse appropriately during the divorce process

What is the Practice Worth?

When a business is subject to division in a divorce, it is important to obtain a valuation to determine how much it is worth. For some types of businesses, the market value is the best indicator of worth. However, professional practices rarely have market value because they have little worth without the involvement of the professional. Therefore, a better option for valuing a professional practice is usually to consider its assets, liabilities, and future income potential. You should consider working with an experienced financial professional to help you reach a reliable valuation.

What are the Options for Dividing the Practice?

A professional practice will likely lose substantial value if it is divided or awarded to the spouse who was not involved in its operation. Fortunately, it is often possible to keep a practice intact and in the possession of the spouse who established it. That said, if you keep your professional practice in the divorce, you will likely need to compensate your spouse in other ways, whether through other valuable marital property or spousal support.

Contact a Kane County Business Asset Division Attorney

At Weiler & Associates, Inc., we have extensive experience representing business and professional practice owners who are getting divorced. We will help you understand the implications of your divorce and work toward a resolution that protects your financial and professional interests. Contact us today at 630-331-9110 to learn what our St. Charles divorce lawyers can do for you.

Source:

https://www.ilga.gov/legislation/ilcs/documents/075000050k503.htm