Handling divorce with a medical practice
Physicians who own a medical practice in Michigan face higher risks from divorce than most people. The assets and income from a medical practice will have to be divided, and spousal support might be in the picture as well. Not only does this lead to large costs for the doctor, but it can also make the divorce process itself much more expensive, lengthy and complex.
What happens when an owner-physician divorces?
A medical practice, even a small practice, can have expensive equipment and large bank accounts that might be divided in a divorce unless they have been protected in a prenuptial agreement. The spouses have joint ownership over equipment that’s considered marital property, even if only one of them uses the equipment for work. That might mean that the owner of the practice is awarded the equipment, but this is offset by awarding the other spouse half of the value of the equipment in cash, retirement savings, real estate, vehicles and other assets. That can leave the owner with the assets connected to their practice but little else.
There may be other complex financial assets unrelated to the practice itself but that high-wealth individuals tend to have, like brokerage accounts. When combined with the value of the practice itself and its assets, unwinding and dividing everything might take a long time and expensive court fees to complete. A mediation process can help reduce costs, but it is still a difficult process to divide assets of higher value.
The best advice for a young doctor who might own a practice in the future is to have a prenup in place before marrying anyone. The divorce process is unpredictable, but the right preparation may help ensure that the practice survives.