Do you find yourself Googling “divorce for physicians?” Divorce for physicians is a little more complicated than your standard uncontested divorce (which is still complicated in its own right). When dealing with divorce for physicians, your divorce lawyers must understand how to navigate the divorce process without sacrificing your practice.
A few complications that are specific only to divorce for physicians includes:
Four Things to Consider When Going Through a Divorce as a Physician
- The Factors Relating to Spousal Support or Alimony
The time and effort that it takes to get through the education required to be a physician, as well as the amount of time that goes into running a successful medical practice throws several layers of complications in the alimony process.
For example, if your spouse supported you while you went through medical school, they might be able to get more in alimony that if you were married after you already had your career going, and they did not contribute to it. If both you and your spouse are physicians, the judge might take into consideration if one of you put their careers on hold (or perhaps weren’t able to excel as much as you would have alone) in order to support the practice of the other one. If you both had completely equal careers and were satisfied walking away from the marriage with what you each have on your own, the process is simple. In the very more likely event that one of you was the “money maker” and the other one supported that cause, the effort that was put into that goes into consideration with the division of assets, and the alimony that is paid to the lower earner.
- The Valuation of the Practice
The valuation of the practice that is run by one or both of you can be a very difficult number to determine. The reason for this is because a large piece of a physicians income and ability to continue make that income is based on goodwill. How do you put a number on goodwill? And more complicated, how do you equally divide goodwill between two spouses who are going their own ways.
On top of that, many assets within the medical practice are extremely high value, but aren’t easy to divide. Let’s say you and your spouse are equal owners on a piece of medical equipment worth half a million dollars. Perhaps the spouse who practices medicine will keep it, but will have to forgo another investment outside of the practice worth the same value in exchange.
- Sweat Assets
It is very common for the non-physician spouse in the marriage to serve a very valuable role within the practice, without an official title or paycheck. Likely, the spouse of the physician serves as the office manager, the accountant, the facilities manager, and the personal assistant to the their spouse. His or her role in the practice was vital, but there is no documentation of what it is worth in dollars.
The lack of an official title and payment history makes the division of assets difficult when handling a divorce for physicians. Ideally, the spouse who supports the physician should draw an income from the practice, even if it is just invested into a tax-beneficial 401(k) account. This gives them a work history what will help them continue their career after the marriage is dissolved, and provides a clearer division of assets later.
- Investment Accounts
Many times, much of the wealth that physicians have is tied up in investment accounts that have restrictions about touching them until the owner of them is 65. These types of accounts are very difficult to divide in the dissolution of a marriage. Sometimes, the assets that a physicians possesses can’t really be divided easily as a result. In order to split up investments like this, they have to be liquidated, which involves significant early withdrawal fees.
The complications surrounding the types of investments that most physicians have require a divorce lawyer who specializes in separation of assets for physicians. If your assets include a significant amount of retirement accounts like this, you should take care to find a divorce lawyer who is equipped to deal with it while going through your divorce.
Do you have any other tips for handling divorce for physicians? Please share below!