Those in business often try to keep their personal and professional lives separate, at least to some extent. When it comes to divorce these two worlds can collide in the worst of ways. Texas state law generally views the assets accumulated during the marriage as community property. This means that the courts are likely to consider the property as owned by both spouses.
What does this mean when trying to preserve a business like a medical practice while going through a divorce? The following will delve into this issue and provide some clarity, as well as tips to help protect the medical practice.
Two questions that impact the extent the medical practice or other business interests are in the crosshairs of a divorce involve the timing and management of the practice. If started or grew significantly during the marriage, the courts will likely view the practice or business interests in the practice as marital property subject to division during divorce. This becomes even more complicated if the spouse played a role in the management of the practice.
There are steps that can help preserve the medical practice even if the courts consider it marital property.
Step #1: Get a prenuptial or postnuptial agreement
In the ideal scenario the medical practice owner would take a step to protect the business before the divorce. This would involve the use of either a prenuptial or postnuptial agreement.
The difference between these two legal documents is the timing. A couple puts together a prenuptial agreement prior to the marriage, a postnuptial during the marriage. These documents can outline how assets are handled in the event of a divorce. Physicians can include a provision that specifically addresses the medical practice.
Step #2: Consider mediation
This alternate form of dispute resolution allows the parties to the divorce to negotiate a resolution instead of relying on the court to put together the final divorce documents, as is common when using traditional litigation. Another benefit: it often costs less. This is because it is generally more efficient, taking less time and thus less expense to finalize the divorce.
Even those who seek mediation are wise to retain their own legal counsel, especially when working to retain an important and complex asset like a medical practice.
Step #3: Get a reliable valuation for the practice
Another way to better ensure full ownership of the practice is to offer another asset of similar value in exchange. This could be a vacation property, a portion of retirement assets or other securities. As long as they are similar in value to the practice and the other spouse agrees, the courts will likely approve the proposal.