If you are a doctor thinking about divorce, there are some important considerations you should be aware of.
1. Be Careful Not to Inflate Your Income
Due to the complex ways in which doctors earn income, they face special concerns in the handling of their divorce. Many physicians earn income from multiple sources. They often own business interests in multiple entities that generate income in different ways. For example, a surgeon may be compensated as an employee of a surgery practice while also receiving income from a surgery center that he co-owns, rental income from real estate that he co-owns, consulting fees from a physical therapy clinic and interest and dividends from investments he owns. In addition, the doctor may receive valuable perks like a company car. The income that is generated each month can vary substantially. During a divorce proceeding, the soon to be ex spouse and her lawyer will want to determine the doctor’s monthly income at the highest possible amount. The doctor and his lawyer will need to be very careful to analyze his income properly and not to overstate the income that the doctor can reliably and dependably earn.
2. Be Careful Not to Overvalue Your Assets
In addition to complex and fluctuating sources of income, many doctors also own a complex set of assets and liabilities tied to their professional pursuits. The doctor may own a minority share of multiple business entities that are not readily subject to sale. For example, the doctor may own shares of a medical practice, a medical building, a surgery center and a physical therapy practice. All of these entities may be encumbered by loans. If these business interests were acquired during the marriage, they are presumed to be marital, even if the wife was never involved in any of these businesses and never had her name on any of them. In Florida, marital property is generally distributed 50-50 to each spouse in a divorce, regardless of the length of the marriage. This means that half of all the doctor’s marital business interests must be distributed to the spouse if they divorce. Practically speaking, a major difficulty can arise in determining how to distribute 50% of an illiquid closely held business to the soon to be ex spouse of one of the partners. Making the estranged spouse a partner is generally not favored by anyone including the spouse. Selling the entire business is generally not favored either. The most common approach to distributing one doctor’s share in a divorce is for the doctor spouse to “buy out” the other spouse. As a result, during a divorce proceeding, the soon to be ex spouse and her lawyer will want to estimate the value of all of the doctor’s business interests at the highest possible amount. The higher the value of the business holdings, the larger the “buy-out” that the spouse can demand. The doctor and his lawyer will need to be very careful to properly value the marital assets to be divided.
If you are a doctor contemplating a Florida divorce, contact Miller Morse Law for a consultation. We are experienced at helping doctors successfully navigate complex divorce proceedings.