While divorce is challenging for all couples, special issues arise when physicians divorce. In New Jersey, these divorces may involve division of a medical practice, alimony issues, and special considerations concerning disclosure of sensitive information.
An MD is Not a Marital Asset
In NJ, a professional degree is not a marital asset. A party divorcing a physician may seek the value of a medical practice or alimony, but not the value of the degree.
Courts are increasingly reluctant to grant alimony, and when awarded, it is rehabilitative in nature, allowing an ex-spouse time to establish themselves financially. For the ex-spouse of a physician, alimony may act as reimbursement, compensating the ex-spouse for financially supporting a partner through medical school. Such alimony is limited and is not indefinite.
Medical Practice as a Marital Asset
A medical practice may be subject to division in divorce only if it is marital property. Whether a medical practice is marital property depends on:
- The corporate structure of the practice.
- The date the practice was established.
- Growth of the practice, if any, during the marriage.
- Agreements between other partners (if any) or owners.
This issue is very fact specific, so consult experienced counsel before assuming a medical practice is marital property.
Valuation of a Medical Practice
Valuation of a medical practice is typically done by an expert, and is dependent on several factors, most notably:
- Tangible assets, such as real property or equipment.
- Intangible assets, like reputation and goodwill.
- Pending liabilities, including loans or pending lawsuits.
In New Jersey, courts divide marital property under Equitable Division Doctrine, and attempt to divide assets in a way that is fair and equitable to the parties. Such division of assets is not always an even division between the parties, but it should be fair. The court will also consider an equitable division of debt, including student loan debt, as well as division of assets.
The ex-spouse of a doctor will not be awarded a share of the medical practice, but division can be handled in two ways:
- The ex-spouse receives other assets to compensate for the value of the practice.
- The ex-spouse may agree to future payouts over time. In these situations, the ex-spouse will often ask for life insurance in the amount of future payments.
If your ex-spouse has sensitive information about your medical practice or you have concerns about attempts to harm your valuable reputation, consider asking your ex-spouse to sign a Non-Disclosure Agreement, or NDA, as a part of the marital settlement.
For physicians facing divorce, it is vital to secure experienced counsel early in the process and to take time to carefully consider your options before signing a marital settlement agreement. Attorney Joseph D. Lento's Family Law Team brings an understanding of the division of marital assets and strong advocacy and negotiation skills necessary in high-value divorce cases. To learn how the Lento Law Firm can help you, contact us online, or call 888-535-3686 today.