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Divorce and your medical practice in Texas

On Behalf of | Feb 20, 2023 | Divorce

Divorcing when you’re a doctor is a difficult process that can easily turn into a legal battle over financial assets. Your priority lies in maintaining the value of your Texas medical practice. The legal and financial aspects of this type of divorce are not apparent to everyone, however. Here is a brief overview of what could happen.

How a medical practice is treated during divorce in Texas

Although your medical license is separate property, your private practice is a possible marital asset. A medical practice is community property in Texas if it was established during the marriage. It can therefore be divided during a divorce. According to Texas’ Corporate Practice of Medicine, it is only subject if both spouses are medical professionals or if they both own the practice.

What does a non-physician spouse get in the divorce?

Doctors that are married tend to earn much higher incomes than their spouses. It is not uncommon for the other spouse to support their studies in medical school. Upon divorce, the supportive spouse may feel entitled to additional expenses other than child support, such as private tuition, alimony, or mortgage payments. They may desire a share of the practice’s value.

In Texas courts, all income and property obtained during the marriage belong equally to both spouses. The divorce process will divide all assets between the spouses. With a medical practice, a non-physician spouse cannot claim partial ownership, but they will seek the sharing of community property ownership interest.

Evaluating the value of your medical practice

Some questions which the answer to will help in properly valuing your medical practice during divorce are:

  • Was your medical practice established before or during the marriage?
  • Is your medical practice a partnership or a group practice?
  • How did you fund the medical practice?
  • Did the participants receive stock?
  • Did the participant acquire any right to ownership or stock during the marriage to which they might be entitled after the divorce is finalized?
  • Do you have a buy/sell agreement for your medical practice?
  • Do you have debts?
  • If you received loans for medical school, did you use the funds only for school, or did you pay for living expenses with them?

When you own a medical practice and start the divorce process, you must agree with your spouse regarding its division. Divisions are not necessarily equal and depend on many factors. It’s important to protect the rights to your medical practice during a divorce.