Doctors as a profession are statistically less likely to be involved in a divorce. They have demanding workloads that can strain a marriage, but a successful doctor is often financially stable, which helps a marriage. When a doctor does divorce, their practice is part of the division of marital properties. Valuing a professional practice is different than other businesses and requires financial professionals who are familiar with these practices.

Practice as Property

Your medical practice is marital property if you started it after your marriage. If your practice predates your marriage, you must include its increase in value since your marriage as part of your marital property. Unlike with other types of businesses, your spouse does not have the option of owning part of your practice unless they are also a doctor in the same practice. This static ownership means that you will need to compensate your spouse with other marital properties. Your student debt from medical school is marital debt if it was accrued during your marriage. You may be able to offer to assume sole responsibility for the debt as compensation for your medical practice.

Valuing a Practice

A medical practice shares many of the factors used in determining the value of other businesses, such as revenues, physical assets, and growth potential. Two factors of particular concern when valuing a medical practice are:

Items that you received as gifts during your marriage are usually considered to be non-marital property. A gift that your spouse gave to you for your birthday or anniversary is non-marital, even though your spouse used marital money to purchase it. However, a divorce court may classify a gift as marital property and subject to division, depending on the intent behind the gift and how you used it. Here are four examples of how a gift can become marital property:

1. Gift for Both: The court will distinguish between gifts that are meant for you only and gifts meant for you and your spouse. Wedding presents are a common example of gifts that are marital property because the giver intended you to use it as a married couple. Your spouse may argue that other gifts were given to you as a couple. You need to explain the reason for the gift and whether your spouse used it.
2. Gift as a Loan: A gift by definition is an asset that someone donates to you with no expectation of compensation. Money that a family member gives you becomes a loan instead of a gift if you agree to pay that money back. Loans that you receive during your marriage are marital debts, which can be divided during a divorce. The best ways to prove that a gift was a loan are showing a promissory note or asking the person who gave the money what his or her intentions were.
3. Gift as a Reward: An asset is not a gift if you received it in exchange for another asset or your services. The circumstances around receiving the asset can determine whether it was a gift or a reward. A court may interpret a monetary gift as compensation if the giver was thanking you for your help or expected you to perform a service soon after.
4. Gift Treated as Marital Property: Even a gift that is meant for you alone can become a marital property depending on what you do with it. For instance, money that you inherit is a non-marital property as long as you keep it separate from your marital money. If you put the money in a shared bank account, it gets mixed in with your marital money and may no longer be an individual asset.

Contact a St. Charles Divorce Attorney

You bear the burden of proof when you claim that an item from your marriage was a gift and is not marital property. A Kane County divorce lawyer at Goostree Law Group can find evidence that the item was intended as a gift to you. To schedule a free consultation, call 630-584-4800.

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Your pension benefits are a marital property during your divorce, with some stipulations. Your spouse has a right to an equitable share of the value of your pension that you accrued during your marriage. If you worked towards your pension before your marriage, the value of those years is non-marital property. You can add value to your pension through means other than the number of years you worked. A recent Illinois divorce case decided whether the military service credits that a man added to his state pension are marital property.

Case Details

In the case of In re Marriage of Zamudio, the spouses had filed for divorce in 2014 after 14 years of marriage. The husband has a state pension from his 22 years of working for the Illinois State Police. During the marriage, the husband purchased four years of credit to add to his pension, based on his active military service from 1974 to 1980. When dividing properties during the divorce, the spouses disagreed on whether those purchased credits are marital properties:

• The husband said that they are not marital property because their value came from his military service that predated their marriage; but
• The wife said that they are marital property because the husband used marital money to purchase them.

The trial court sided with the husband, saying that all he owed the wife was half of the money that he spent to purchase the credits.

Some marital properties from a divorce are more valuable to you if you sell them instead of deciding which one of you gets to keep them. In a divorce sale or auction, you can convert properties that neither of you wants into money, which you split as part of your division of property. You do not have to organize your divorce sale together with your spouse, but he or she must approve the sale of any marital properties. You must plan ahead for your divorce sale to ensure that you will receive full value for your properties.

Advantages

You will have different needs as a single adult than when you were married. Some properties will be impractical to keep as part of your new lifestyle. For other properties, their monetary value is more useful than the enjoyment you get from them. Selling these properties may be to your advantage because:

• Unlike the property itself, you can equitably divide the money from selling the property;
• You may need the money to support yourself after your divorce;
• Money from a divorce sale can help pay off marital debts; and
• You can save on the cost of keeping and maintaining the property.

A Successful Sale

Once you have identified marital properties that you want to sell, you must research and plan before selling the items. You can cheat yourself and your spouse by selling these properties for less than they are worth. Here are three keys to a successful divorce sale:

Your efforts to protect your business from a possible divorce should have started at the beginning of your marriage. Keeping your business finances separate from your personal finances prevents your spouse from claiming ownership of your business. You can also create a premarital agreement that gives you complete control of your business in case of a divorce. Without these protective measures, your business is a marital property that you must account for in the division of property. You can maintain control of your business after your divorce, but it may require some sacrifices. Here are four steps to protect your business during your divorce:

1. Separate Business from Marriage: Your business may already be a marital property if you invested marital assets into it. Moving forward, you should create a wall between your business and personal finances. Have separate accounts for business and personal expenses and do not transfer money between them. Limit your use of marital properties as part of your work. You should have separate business and personal finance records.
2. Ease Your Spouse Out of the Business: Your spouse should no longer be involved in your business, whether as an owner or an employee. You can offer to buy his or her ownership interest in your business. You can fire your spouse as an employee but should understand the consequences of this action. By cutting off your spouse’s source of income, he or she will be more dependent on you following the divorce. You can instead lessen your spouse’s role in your business and encourage him or her to seek new employment.
3. Assess Your Business: You need an accurate value for your business to ensure a fair division of property. Overvaluing your business means you will give up too much in order to keep it during the division of property. You must assess both the current and future value of your business. You can be conservative in projecting your business’s growth and the economic outlook for your industry.
4. Identify Bargaining Chips: You will need to give up other valuable marital properties in order to keep complete ownership of your business. Privately decide which properties you are willing to sacrifice but do not lose leverage by letting your spouse know the properties you think are expendable. Your marital home may be your most valuable bargaining chip.

Your Business as a Marital Property

By protecting your business, you are also protecting your source of income and something you have invested great time and energy into. A Kane County divorce attorney at Goostree Law Group can give you strategies for keeping your business during a divorce. Schedule a free consultation by calling 630-584-4800.

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