Protecting Professional Practices In Divorce

When one or both spouses in a divorce have ownership in a professional practice, things can become complicated. Spouses who are partners, shareholders, or sole owners of a professional practice have likely invested a great deal of time meeting with attorneys and accountants to limit personal liability and taxes that arise from their practice. In these discussions, the possibility of divorce may have been contemplated and a prenuptial agreement or other pre-divorce plan was put into place to protect their business. Many, however, do not have any pre-divorce safeguards, which can put their professional practice at risk during a divorce.

Valuing A Professional Practice

One of the more difficult issues regarding the division of a professional practice during divorce is the valuation, which can be one of the single most expensive aspects of any divorce. Professional practices are particularly difficult to value because the majority of the practice's worth is in the form of goodwill, i.e., the value of the practice's reputation. Since goodwill is intangible and can be valued in a number of ways, it is often necessary to enlist the help of a professional expert or experts to place a fair value on the practice.

Once a fair value has been agreed upon, the next step is to determine how much of the professional practice is separate property and how much is community property. While the value of a business created before the marriage is typically considered separate property, many professional practices dissolve and reorganize several times over the course of the professional's career. For example, a partnership may dissolve and then later reorganize as a limited liability company. A divorce attorney who is experienced with dividing professional practices will be able to help you determine how much goodwill transferred from one entity to another.

In addition to its value in the professional practice, the community estate may also be entitled to reimbursement for education and training costs incurred during the marriage.

An experienced divorce attorneys can help protect the interests of professional practices through divorce proceedings. If you find yourself in this situation, look for an attorney with the knowledge and experience to help ensure that a fair valuation is made, and that can help keep your private practice protected during divorce. Even if you don't have any pre-divorce arrangements in place, the counsel of an experienced family law attorney can help immensely in this complicated area of the law.

No Comments

Leave a comment
Comment Information
  • AV Preeminent Martindale Hubbell lawyers Ratings State Bar Of California | California Board of Legal Specialization Ventura County  bar association | Est. 1928 The State Bar of California Beverly Hills Bar Association ABA Defending Liberty Pursuing Justice
  • San Fernando Valley Bar Association LACBA | Los Angeles County Bar Association Avvo Super lawyers TLC | Los Angeles | Trial Lawyers Charities

Contact Us for a Consultation

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Email Us For A Response

Contact Information

Calabasas Office
23501 Park Sorrento
Suite 103
Calabasas, CA 91302

Map & Directions

Beverly Hills Office
433 North Camden Drive
Suite 600
Beverly Hills, CA 90210

Map & Directions

Click to View Offices