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December 20,2021

Divorce, Family Law, High Net Worth Divorce, Property Division

Goodman Law Firm

How is a Professional Practice Impacted by Divorce?

HomeBlogDivorceHigh Net Worth DivorceHow is a Professional Practice Impacted by Divorce?

Even the most straightforward divorce is complicated, and the division of marital property has the potential to be one of the most hotly contested issues in nearly every divorce. One factor that can turn the heat up a notch or two, however, is ownership of a professional practice, such as a law, medical, or dental practice. If this is the situation you find yourself in, you need the professional legal guidance of an experienced Illinois divorce attorney in your corner. 

The Division of Marital Property

In Illinois, those assets and properties, including a professional practice, are considered marital property, and in the event of divorce, they must be distributed between you and your ex in a manner that is deemed equitable (or fair in relation to the circumstances involved. One factor that tends to make this division of marital property more complicated is if there is a professional practice involved. 

If you have no prenuptial or postnuptial agreement in place that addresses the matter of your professional practice and you started the practice during your marriage, it is almost certain to be viewed as a marital asset in the eyes of the law, which means you will need to equitably address the division of the practice’s value in the course of your divorce. 

Ownership Prior to Marriage

Owning your professional practice prior to marriage makes it your separate property, and although separate property is not subject to division in the course of divorce, there are factors related to your practice that can nullify or reduce this separate quality, including:

  • If your spouse made significant contributions to the professional practice throughout your marriage, such as by running the office and/or keeping the books (for example)
  • If marital funds were used to bolster the business
  • If you ran the business but failed to pay yourself a fair wage (which would amount to marital assets bolstering the business)

Further, even if you kept your professional practice strictly separate from your marital finances, any increase in its value amounts to a marital asset that will need to be divided between you equitably. 

Determining Your Professional Practice’s Value

Putting a value on a professional practice is complicated at the best of times, but when divorce is involved, it can make the matter that much more challenging. The best path forward generally involves working closely with your respective divorce attorneys, business appraisers, and other financial professionals in the determination of how your professional practice will be handled in your Illinois divorce

The practice’s value – for the purposes of your divorce – will likely hinge on what is known as its fair market value (what an interested buyer would likely pay to purchase the practice) and on the personal goodwill that each of you contributed to the growth and development of the practice. Typically, the spouse who is the most involved in the practice (such as if you are the professional in question) retains ownership in the practice, while the other spouse is assigned his or her equitable portion in a marital property of equivalent value – or via a buyout. 

Turn to an Experienced Illinois Divorce Attorney for the Legal Guidance You Need

Cameron H. Goodman at Goodman Law Firm in Naperville has a wealth of experience helping clients like you successfully resolve challenging divorce concerns, and he’s here for you, too. To learn more, please don’t wait to contact us today.

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