What Happens to a Professional Practice During Divorce?

 Posted on April 12,2018 in Complex Divorce

Having a professional practice can make the divorce process much more difficult, as the parties are usually required to value and divide not only personal property but also professional assets and business interests. These types of challenges are best handled by an experienced high asset divorce attorney, so if you have decided to file for divorce and either you or your spouse has a professional practice, please contact our legal team for an initial evaluation of your case.

Dividing Marital Property

Under Texas law, couples who dissolve their marriages must divide all marital assets equitably. This applies to the contents of bank accounts, retirement funds, stocks, real estate, personal belongings, and even business interests. In fact, even when a spouse doesn’t have a specific interest in a business, as is usually the case when one spouse runs a professional practice, he or she could still have a claim to a portion of the business’s value, although not to the practice itself.

The Value of a Professional Practice

Dealing with the division of a professional practice during divorce can be complicated, as it raises a host of issues unique to high asset divorce. For instance, not all professional practices actually have value. This is usually the case in situations where a business would not persist without the presence of the professional spouse. If, however, a business would continue even if the spouse were not involved in the practice, the company would carry much more value. This is known as a business’s goodwill and calculating it is a critical part of valuing a professional practice. This evaluation centers on a specific set of questions, such as whether the practice has its own name, employs other people, has an established location, or contracts directly with clients.

It is also worth noting that physical ownership of a professional practice cannot usually be divided because the non-professional spouse wouldn’t be licensed to operate that type of business. For this reason, couples must determine the value of a professional practice in order to divide it during divorce. Because only the value of professional practices is subject to division, many divorce cases where one of the parties owns a professional practice require the licensed spouse to buy out the other party’s property interest. Finally, although degrees and licenses are not treated as marital property, a spouse who helped the other party obtain such a license could also be entitled to compensation in the form of alimony payments.

Call a High Asset Divorce Attorney in Cedar Park Today

If you have questions about dividing your professional practice, please contact one of the experienced Georgetown high asset divorce attorneys at Powers Kerr & Rashidi, PLLC today. We can assist you throughout your case.

Sources:

http://www.statutes.legis.state.tx.us/Docs/FA/htm/FA.3.htm

https://www.entrepreneur.com/article/220124