As a California healthcare provider who owns a private practice, your livelihood depends on its success. Although you may have gotten into your profession to help others, it is still a business. As such, it may also be a marital asset. The status of your practice, the State’s community property laws and your unique circumstances determine how a divorce affects your ability to keep the doors open.
According to the California Courts, property is anything that has value in a sale, such as the following:
- Houses or other real estates
- Motor vehicles
- Bank accounts and cash
- Businesses
- Patents
- Pension plans and 401(k)s
As a community property state, the debt and assets you acquire during your marriage or partnership become community property. For it to retain value, the doors must stay open. As a result, divorce proceedings can become complicated.
Is it a marital asset?
Several factors help determine if your medical practice is marital property and how you address it during a divorce. Did you establish the practice before getting married? If so, the court may classify your business as a separate or non-marital asset. However, if it grew and became a thriving practice after your marriage, a judge may consider the increased value part of the divorce settlement.
Did your spouse work for you at the practice, take a small salary or none at all? Did they defer their own career to ensure your success? If so, the court may determine your spouse earned a significant portion of the value of your business.
What is the value?
A valuation includes both tangible and intangible elements of the business. Tangible items often include physical property, equipment and records, and intangible assets may encompass intellectual property, professional and personal goodwill.
The age, legal status and funds used to start or expand your practice may also affect how the court divides your business during a divorce. Understanding your options is critical to working out a settlement that allows you to keep your practice.
