A divorce involving a medical practice presents unique challenges. Unlike other marital assets, a medical practice is not just a source of income—it is also a professional career, a business entity, and a service to patients. Illinois law requires equitable distribution of marital assets under 750 ILCS 5/503, but equitable does not always mean equal. Protecting a medical practice during divorce requires careful planning, negotiation, and legal strategy.
Courts consider whether a medical practice is marital or non-marital property. If the practice was started or acquired during the marriage, it may be subject to division. Even if one spouse is the sole owner, the other spouse may claim a financial interest in the business. Proper legal planning can help minimize the impact of divorce on medical practice and ensure that it remains intact.
Under 750 ILCS 5/503(a), property acquired before the marriage is non-marital and typically not subject to division. However, if the practice grew in value during the marriage due to spousal contributions or joint financial efforts, it may be considered a marital asset.
A well-drafted prenuptial or postnuptial agreement can define a medical practice as separate property, protecting it from division. Illinois courts recognize valid agreements under 750 ILCS 10/4 as long as they are fair and enforceable.
If a medical practice is classified as a marital asset, determining its value is critical. A forensic accountant or business appraiser will assess factors such as:
An accurate valuation can help in negotiations and reduce disputes over the practice’s worth.
One strategy to retain full ownership is to compensate the other spouse with other marital assets. These financial assets might include:
This approach ensures fairness without disrupting the practice’s operations.
If a spouse played a role in managing finances, staffing, or administration, they might claim a stake in the business. Keeping the practice separate from marital involvement reduces the risk of disputes.
Medical practices structured as professional corporations, partnerships, or LLCs may have agreements that restrict ownership transfers. These agreements can protect against forced sales or outside claims during a divorce.
Yes, if the practice was established or grew in value during the marriage, it may be subject to division under 750 ILCS 5/503. If it was owned before the marriage, it may remain separate property, but any marital contributions could impact its classification.
Several strategies can protect a medical practice, including prenuptial agreements, buyout arrangements, and asset offsets. Keeping financial records separate from marital finances also strengthens claims of separate ownership.
A business valuation determines the medical practice’s worth. Courts consider revenue, goodwill, assets, and debts when deciding whether a spouse is entitled to a share. Having an independent appraiser ensures a fair assessment.
Even if a spouse was not directly involved, they may still claim an interest if marital funds were used for business expenses, loans, or growth. Negotiating a buyout settlement may prevent further litigation.
If the practice is a partnership or corporation, the divorce may impact ownership shares and financial agreements. Many business entities have operating agreements that restrict the transfer of shares to outside parties, limiting a spouse’s ability to claim ownership.
Negotiation is often the best approach to protect a medical practice. Litigation can be costly and disruptive to the business. A settlement that compensates the other spouse without dividing the practice is often the most practical solution.
Selling a medical practice is not the preferred solution in most cases. Courts aim to keep businesses intact while ensuring a fair financial outcome. Most divorcing physicians can retain full ownership by offering other marital assets in exchange.
Divorcing while owning a medical practice requires careful legal planning to protect business interests and financial stability. At Gordon & Perlut, LLC, we help clients develop strategies to keep their medical practice intact while achieving fair settlements.
Contact our Skokie divorce law firm by calling our Chicago office at 312-360-0250 or our Skokie office at 847-329-0101 to schedule a consultation. We represent clients throughout Illinois and provide tailored legal solutions for complex divorce matters.