If you are a doctor in New York about to get divorced, evaluating your medical practice is one of the most crucial steps in preparing for this life-changing move. These days, most doctors have a partnership or are involved in a group practice, so accurately assessing your financial percentage is essential to your proceedings.
Questions you should expect
Expect some hard questions from various individuals who will help you through your divorce. These queries are necessary to determine valuation. Essential questions include the following:
- The type of practice
- When it was established
- How it was funded
- If stock was issued
- Buy/sell agreement in place
- Future vesting after the divorce is final
How do I determine my practice’s value?
A forensic accountant experienced in medical practices will examine tangible and financial assets, accounts receivable, office equipment, furniture and the office lease. The accountant must also consider liabilities like insurance costs, taxes, contributions to retirement plans and loans, as well as other factors like where the practice is located and its profitability. Efforts to misrepresent your medical income will be considered fraud, so accuracy is paramount. You should also inform partners or other doctors in the practice of the impending divorce because they could be on the line for any inaccuracies.
Protecting your practice and its assets
Most divorces involving physicians are high-net-worth situations, and as such, can become complicated and lengthy. As a physician, you should remain aware that depending on where you live, your soon-to-be ex-spouse may not be able to own a share of your practice, so you may have to consider other ways to splitting your marital property. For most doctors, maintaining their practice is paramount.
New York is an equitable distribution state, meaning marital property isn’t divided on a 50/50 basis. Unless your estranged spouse is also a licensed physician, they cannot receive a part of the practice in a settlement, so other assets will need to be examined.