The challenges of appraising a medical practice in a divorce

When a solo physician in New York is going through a divorce, one of the most important elements may be appraising the worth of the medical practice. This can be a complex process.

Figuring out the value

Among the relevant factors are whether the practice was established before or after the marriage, the type of entity it is and how it was funded. Whether or not there was a buy/sell agreement and information about any stock associated with the practice are also relevant questions.

Both spouses usually have separate appraisers, and the process involves assessing the value of everything from the office equipment to the general goodwill toward the practice. The appraisal process can potentially become contentious, with forensic accountants on both sides challenging the other.

What the spouse is owed

It may be illegal for a person who is not a physician to own a medical practice. This means that a non-physician spouse cannot be given a portion of the practice as part of the divorce settlement, and a different financial arrangement will be necessary. This can either be negotiated by the individuals or a judge will decide what the settlement will be. An additional complication is that some physicians have an agreement that stock is forfeited if a member is going through a divorce, although it might be possible to repurchase it afterwards.

Some of the same issues may arise with other types of businesses. Although there might not be laws against the spouse becoming a part-owner, the partners may have an agreement in place that prevents this. Additional complications may arise if the owner lacks the liquidity to pay the other spouse. If both spouses own the business, they might agree to sell the company, although in some cases they may both continue running it.