...

Divorce for Doctors, Dentists, and Other Medical Professionals

One of the most distinctive aspects of being a healthcare professional is the chance to not only apply medical expertise but also assume responsibility for the practice you’re involved in. For many doctors and dentists a few years into their careers, the prospect of investing in a small clinic, office, or similar setup arises. While this presents significant financial potential, it also carries inherent risks both during the purchase and in the long term. Divorce, in particular, poses a significant threat to doctors, dentists, and other medical professionals.

When it comes to divorcing a doctor or dentist in Texas, you need to be aware of the implications of you or your spouse owning a part of your practice. Whether you are a doctor or dentist or married to him or her there is a range of outcomes that can be the result of a divorce when it comes to community property. Community property laws in Texas actively ensure that spouses, even as doctors or dentists actively practice and earn substantial salaries day in and day out, and are not excluded from the income and asset split portion of a divorce.

Unveiling the Unique Marital Property Laws in Texas

For many people going through a divorce in Texas, this can come as a surprise. I believe that most people assume that the marital property laws in Texas are like those in most of the other states in our country. Specifically, the spouse who earns more during the marriage stands to receive a larger portion when dividing property.

However, Community property laws in Texas do not follow this approach. Instead, they generally treat property acquired or income earned during the marriage as being earned equally by both spouses. There is no your or mine property in a divorce, At least when it comes to property acquired during the marriage.

So, if you are reading this blog post and are a spouse of a physician or dentist this should be welcome news to you. I have worked with spouses of high-earning professionals who have been extremely pessimistic about there being any chance of receiving a fair shot in the marital property aspects have a divorce. As such, many spouses in your position hope to at least be able to have enough to subsist on after the divorce comes to an end. They assume that it is their spouse who stands to retain the vast majority of the wealth in a property earned during the marriage.

Recognizing Spousal Contributions Beyond Finances

As we just covered, this is not the case in Texas. Additionally, it overlooks the significant role that spouses play in contributing to the household, income building, and asset creation seen in successful marriages. For instance, if you are the spouse of a doctor or dentist, even if you did not go out and earn a great deal of money during your marriage as your spouse it is undoubtedly true that you made contributions in other ways. Not necessary for a spouse to only make financial contributions to be highly valued in a divorce context.

With that said, I would like to spend the remainder of today’s blog post discussing just how a divorce can impact your or your spouse’s medical practice. Whether you are a practicing physician or dentist or are married to 1, you need to be aware of the ins and outs of this area of the law especially as it pertains to divorce cases and community property division. You could have worked tirelessly to build wealth for your family and would not want to see it evaporate needlessly or unnecessarily. Understanding the law and how it could treat your family in these circumstances is a key part of that discussion.

The impacts of divorce on a medical or dental practice

We all know that divorce is not something that anyone likes to discuss or even think about in conjunction with a marriage. Divorce is to a marriage what death is to a person’s life. While we all acknowledge that any marriage has the potential to end in divorce, discussing the possibility can be uncomfortable, especially when considering the implications for you and your family. Even in the best-case scenario, divorce leaves enduring marks on your family, creating lasting impacts that are hard to erase or forget. It profoundly affects your medical practice, children, relatives, friends, and employees. Indeed, the ripple effects of a medical professional’s divorce can spread far and wide.

Undoubtedly, many factors are important in a Texas divorce case. By emphasizing the importance of understanding the impacts of divorce on your medical practice I do not mean to push to the side the importance of your family, children, retirement savings, or other forms of wealth. Anyone undergoing a divorce with children under 18 strives to protect their relationship with their offspring. Often, the most acutely felt aftermath years after a divorce centers on its impact on the children.

The Impact of Practice Ownership on Divorce Proceedings

With that in mind, I find this topic particularly intriguing today because owning a medical practice is as integral to a doctor as owning a dental practice is to a dentist. Additionally, your ability to earn an income, provide for your family, and plan for your future—including your children’s college or post-high school activities—depends on the success of your practice. As family law attorneys, we take on the goals and aspirations of our clients. Whether it was your goal or your spouse’s to build your practice, losing sight of its significance during a divorce would be a significant mistake.

As we have already discussed, Texas is a Community property state. In general, community property laws dictate that the property acquired during the marriage is subject to division. There are some exceptions to this general rule but for today’s blog post let’s assume that you opened up your medical practice during your marriage and it has been ongoing for years. You have put in many hours into building the practice and now he both earned a salary from that practice as well as receiving bonuses and other sums of money as a result of your having an ownership stake.

Divorce: Potential Threats to Your Family and Medical Practice

This reality for your family has been a tremendous boon from a financial standpoint. Now that you are going through a divorce it has also been a source of consternation and worry. You have heard horror stories from friends and colleagues about how their divorce Harmed their practice a great deal and their family even more. You have tried with all your might to manage your practice in a way that would benefit your family for generations to come. Does your divorce have the potential to ruin your plans and destroy the business that you worked so hard to create? Likewise, what if you are the spouse of a hard-working doctor or dentist? Would you feel comfortable with the idea of not being able to take part in the success of your spouse as you head towards a divorce?

On the other hand, if you already had a medical practice before your marriage but you simply continued once you tie the knot then you have a more interesting situation on your hands. We can think of it as what would happen if you owned a rental property before your marriage and continued to own a rental property after you got married. In a situation like that, the home would likely remain your separate property no matter what else happened in your divorce. However, we would need to look to any money utilized to enhance the business or otherwise that went into the practice.

In Divorce, Reimbursement from the Business May Be Due to Your Spouse

In that case, almost certainly true that your spouse will be due for some sort of reimbursement out of the business. The reason for this is that community income was utilized to benefit the separate property asset. Calculating that would be tricky and could require the assistance of an accountant or expert to be able to help you and your attorney do so. Do not underestimate how complex this aspect of your divorce can become. You should collaborate closely with your attorney to ensure that every detail is accounted for in determining the value of your business. This is true whether or not the business is ultimately classified as separate property or Community property.

Since Texas is a community property state, the likelihood is high that the court will divide your marital property, including your medical practice, roughly down the middle. Regardless of whether you own a medical practice, you need to be aware of the value your business has gained throughout your marriage and its current standing. Again, obtaining the perspective of multiple experts in this field can be especially helpful for you and your family. Ultimately what may happen is both you and your spouse will get to a point where assessments from your experts will go before a judge if you all cannot settle your case on issues related to the valuation of the business.

Factors Impacting Division of Medical Practice Assets in Divorce

The length of your marriage and when your medical practice began will be important factors in dividing assets associated with your business in your divorce case. If you have been married for 30 years and started your medical practice two years into your marriage, a significant percentage of your assets may be tied up in the business. While you may wish for your business to be successful, its success will directly affect the amount of Community property you own. Therefore, your spouse is likely in line to receive a substantial portion of that well no matter if he or she ever worked a day in their life in your business.

Meanwhile, the argument of your spouse’s attorney in a trial scenario could hinge on what opportunities he or she gave up to assist you with building your practice. Your spouse may present arguments such as working late hours, forgoing college opportunities, or helping to raise a family as reasons why they deserve a substantial share of the business in the divorce settlement. While all of these arguments have merit in many circumstances, they may sound a bit hollow coming from your spouse. This is especially true if you know that he or she took advantage of your wealth and success and perhaps even filed for divorce without telling you first.

What about alimony?

In Texas, there are two types of what is commonly referred to as alimony. The first is contractual alimony and the second is spousal maintenance. Contractual alimony comes about as a result of negotiations between you and your spouse. Contractual alimony allows both parties to agree on a specific sum of money to assist your spouse in meeting their minimum basic needs for a designated period. Essentially, your obligation to pay alimony comes about as a part of a contract between you and your spouse.

On the other hand, a judge orders spousal maintenance as another form of support paid after divorce, following a trial. The judge must determine that your spouse lacked sufficient means to earn income after the marriage, separate property, or Community property to order spousal maintenance. If your medical practice forms part of the community property, the probability of your spouse receiving spousal maintenance is low.

You can show that the income and property from the divorce settlement would sustain them adequately, even without ordering alimony. This stands in stark contrast to a situation where your spouse would not have the ability to earn an income after your marriage or where insufficient Community property or separate property existed to sustain him or her.

What happens to your actual office?

Bear in mind that most of the discussions surrounding your business in a divorce center around the monetary value of the practice. His spouse likely will not be concerned with the physical office location or the persons who work in your office. It is not as if a near spouse could immediately take on a role as a doctor or dentist within your practice. As we have discussed previously, your spouse seeks the ability to receive a buyout from you for their contributions during the marriage.

If you do own the office space where you practiced then a real estate appraiser needs to weigh in to determine the value of the property. On top of that, what if you owned an office park where a new practice? Leasing the building to other businesses represents another source of income that you must account for in your divorce. It is reasonable to not want to have to relocate your practice as a result of your divorce.

Muller court will expect you to compensate your spouse for their portion of the building or complex, it is not necessarily true that you will have to move your practice. I have seen doctors and dentists sell their portions of a building or complex to their medical or dental partners and then rent a chair or office space back from those partners. Additionally, you could take the money earned from selling your portion of the building and pay it to your spouse in the divorce.

Conclusion

The journey of a medical professional extends beyond the realm of patient care to encompass the intricate balance of practice ownership. Investing in a clinic or office not only brings financial rewards but also requires careful navigation of risks, including those linked to divorce for medical professionals. Amidst the myriad challenges, the specter of divorce emerges as a poignant concern, potentially disrupting both personal and professional spheres. Yet, with prudent planning and strategic foresight, doctors, dentists, and other healthcare practitioners can mitigate these risks and continue to thrive in their dual roles as medical experts and business owners.

Questions about the material contained in today’s blog post? Contact the Law Office of Bryan Fagan

if you have any questions about the material contained in today’s blog post please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed family law attorneys offer free-of-charge consultations six days a week in person, over the phone, and via video. These consultations give you an excellent opportunity to gain insights into Texas family law and understand how filing a divorce or child custody case may affect your family circumstances. Thank you for your interest in our law practice and we hope that you will join us again tomorrow as we continue to share more information about the world of Texas family law.

Adobe Stock 62844981[2]If you want to know more about what you can do, CLICK the button below to get your FREE E-book: 16 Steps to Help You Plan & Prepare for Your Texas Divorce

  1. Why is divorce so hard for doctors? How can you make it easier on yourself?
  2. Are Doctors Doomed to Divorce?
  3. Divorce and Business Ownership: Protecting Your Assets
  4. 6 Tips – On How to Prepare for a Texas Divorce
  5. 3 Tips on Things You Shouldn’t Do in a Texas Divorce
  6. 15 Quick Tips Regarding Filing for Divorce in Texas
  7. Roadmap of Basic Divorce Procedure in Texas
  8. Child Custody Basics in Texas
  9. 6 Mistakes that Can Destroy Your Texas Divorce Case
  10. 10 Quick Tips About Parental Visitation
  11. Does it Matter who Files First in a Texas Divorce?

Law Office of Bryan Fagan, PLLC | Houston, Texas Divorce Lawyers

The Law Office of Bryan Fagan, PLLC routinely handles matters that affect children and families. If you have questions regarding divorce, it’s important to speak with one of our Houston, TX Divorce Lawyers right away to protect your rights.

Our divorce lawyers in Houston TX are skilled at listening to your goals during this trying process and developing a strategy to meet those goals. Contact the Law Office of Bryan Fagan, PLLC by calling (281) 810-9760 or submit your contact information in our online form.

Categories: Divorce

Share this article

Category

Categories

Contact Law Office of Bryan Fagan, PLLC Today!

At the Law Office of Bryan Fagan, PLLC, the firm wants to get to know your case before they commit to work with you. They offer all potential clients a no-obligation, free consultation where you can discuss your case under the client-attorney privilege. This means that everything you say will be kept private and the firm will respectfully advise you at no charge. You can learn more about Texas divorce law and get a good idea of how you want to proceed with your case.

Plan Your Visit

Office Hours

Mon-Fri: 8 AM – 6 PM Saturday: By Appointment Only

"(Required)" indicates required fields