Many high-asset couples in New York have lengthy and complicated divorce proceedings because of the complexity of their assets. For medical professionals, evaluating the worth of their practices is crucial in attaining an equitable divorce settlement.
Considerations in determining the worth of a practice
All business owners must determine the worth of their companies for divorce proceedings, but physicians have special considerations. A fair evaluation process must consider the following factors:
- What kind of practice is it?
- When was it established?
- How was it funded?
- Was stock issued?
- Is there a buy/sell agreement?
- Is there any future vesting of ownership?
All of the above factors affect the value of a physician’s practice. Consider bringing in a forensic accountant experienced in evaluating medical practices to determine the worth of yours. A forensic accountant will examine tangible and intangible assets like goodwill, office equipment and furniture, the office lease and accounts receivable. The valuation is especially important in jurisdictions where non-physicians cannot own any portion of a medical practice. Be prepared for your spouse to have their own expert to evaluate the practice. When this happens, you can expect “dueling experts” to present their own version of what the practice is worth, so neither may get exactly what they want. On the other hand, you need to ensure that your spouse’s evaluator is fully qualified to perform the work.
Why proper practice valuation is essential
An incorrect valuation of your practice could jeopardize your financial well-being for years to come. You must ensure that your practice is valued properly to attain an equitable divorce settlement. An evaluation that is too high can have you paying hundreds of thousands of dollars in a settlement that will favor your spouse.
Working with professionals who are knowledgeable regarding medical practice evaluations and negotiations to split such assets will benefit everyone involved. Take your time when evaluating your practice. If you need to consult more than one professional, do so to ensure your peace of mind and to preserve your future income. Spending money now may help you save money later.