A Prescription for Complications: Divorcing as a Doctor in Texas
Divorce can be a difficult and daunting process for anyone, but for physicians, doctors, and other licensed medical professionals, the practice of medicine can make for some very unique complications. While we’ve discussed some of the challenges of navigating a divorce where one or even both spouses are licensed professionals with a professional practice, our team at Coker, Robb & Cannon, Family Lawyers wants to focus on divorces involving doctors and other physicians or medical specialists.
Whether you’re a family practitioner or the world’s leading cardiologist, or married to one, a Texas divorce means you are likely to face challenges and considerations most other divorcing spouses do not. If that sets off any alarm bells, they’re fully warranted – not only because your personal and financial future may be significantly impacted by the outcome of your case, but also because your professional career, medical license, and ethical standing can be deconstructed quickly if things aren’t handled correctly and in accordance to specific laws.
Why Divorcing Doctors Face Difficulties
Every doctor is different, and so is every divorce. While the humble local primary care provider may have a different portfolio and personal life than the world’s most renowned and handsomely paid plastic surgeon, divorce cases involving doctors, physicians, and other types of licensed professionals can pose a number of unique issues and various difficulties when it comes to reaching a workable resolution.
If you’re a physician, married to one, and are contemplating filing for divorce in Texas, here are a few practical considerations to think about:
- High net worth – Many physicians enjoy the fruits of their hard-earned education and specialties, which is why many divorce cases involving medical doctors and other professionals with doctorate or advanced degrees also involve high net worth estates. Larger martial estates, complex and varied investments, and other financial holdings put more on the line when it comes to resolving financially related matters like spousal support (alimony) and the property division. They can also make for numerous challenges when it comes to accurately characterizing assets and debts as community or separate property, a task which often requires experienced lawyers skilled in tracing assets, property characterization, and effective means of negotiating or litigating resolutions.
- Complex assets – Having a sizeable estate is one thing; but having many assets and varied types of assets can create additional complications in any divorce case. It is not uncommon for doctors who devote so much of their time to helping others to enjoy time to themselves and hobbies they can call their own. Whether this includes various commercial or residential real estate properties domestic or abroad, rare and valuable antiques or collections, collectible cars or memorabilia, investment properties, ranches or farms, or other types of unique assets, you can be sure the need for proper valuation, accurate characterization, and skillfully and creatively negotiated resolutions is often elevated. That’s especially true if doctors are part of a professional practice and have complex financial assets related to employment benefits and retirement funds, profit-sharing plans, trusts, and more.
- Spousal support – Spousal support can be paid both during (via a temporary order) and after a case (per the terms of a settlement or a court order), so it’s important to carefully evaluate options for not only the amount of spousal support a recipient spouse may be eligible to obtain, but also options for alternative structures and resolutions, including disproportionate awards for certain assets, or agreements where spousal support decreases over time or until a recipient spouse obtains the resources to obtain work which allows them to support themselves.
- Medical degree support/reimbursement – Since becoming a licensed doctor requires years of schooling, money, and support from loved ones, it is common for non-physician spouses to support their significant other as they pursue a degree. If one spouse supported the other in their pursuit of a medical degree, that support may become a consideration when it comes to spousal support, reimbursement, and the property division. Spouses will need to evaluate when and how a doctor-to-be was supported as they went through school, internships, and training, and situations where those supporting spouses later left their jobs to take care of a family after the other became a doctor or continued to work and earn income.
Medical Practice: Professional Assets, Valuation, and More
Perhaps one of the greatest challenges associated with divorces involving doctors is that they often involve professional practices. Valuing a medical practice, complying with applicable laws and regulations, and sifting through dense and detailed documentation is no easy task, but experienced family law attorneys know what to look for and what questions to ask – and clients should be prepared to answer them.
For example, family lawyers addressing issues involving a medical practice may need to consider a number of factors in order to navigate divorce proceedings effectively and resolve important issues such as property division, spousal support, and more. These may include:
- What are we dealing with? What type of practice is involved (solo practice, partnership, or group), what type of entity does a practice operate as, are both spouses doctors, do they practice together, etc.?
- Community or separate property? When the practice was founded (i.e. before or after the date of marriage) will be critical to characterizing assets and the practice itself, as will evaluating any unique factors – from how one spouse may have supported the other when they earned a medical degree to the contributions they made to how long after marriage a spouse operated a practice they founded before getting married.
- What about finances and debts? How the practice was funded and whether there are existing financial obligations, potential claims for reimbursement, or other factors to consider for the purpose of division.
- Are there contracts and agreements? Certain contractual agreements (i.e. buy-sell agreements, partnership / shareholder contracts, etc.) within a medical practice could potentially impact a divorce case, as can contracts like prenuptial or post-nuptial agreements.
- Are there things to consider in the future? Whether there are stock options issued to practitioners, profit-sharing plans, or future vesting of stock or ownership rights a doctor may be entitled to after divorce (provided such a right was acquired by the physician spouse during marriage) may impact negotiations, as can any other considerations about the future, such as retirement, selling a practice, and more.
Valuation – These and other factors are important when it comes to determining what is and what is not possible in terms of potential options, whether creative solutions can be utilized, and when accurately valuing the medical practice and any other professional assets. For valuations as complex as this, knowledgeable assistance and forensic accounting is important. Medical practices aren’t simply worth what they earn from medical bills, and the value of a solo practice is much different than a group with 30+ physicians. Valuations needs to address the unique characteristics of a practice, and calculations which take into account its various tangible and intangible assets, including:
- “Personal goodwill” (any goodwill tied to a professional practice, if such good will exists, is not considered for the purposes of the valuation in Texas divorce cases)
- Intangible assets such as referrals and recurring patients / clients, and reputation.
- Liabilities, including any insurance-related expenses, taxes, and contributions to loans or retirement/benefit plans
- A practice’s location and its historic profitability
Texas Laws on the Practice of Medicine – Texas has a legal doctrine known as the Corporate Practice of Medicine (CPM) doctrine which prohibits non-licensed individuals or entities from practicing medicine. The implications of this particular prohibition, which is intended to protect the public and ensure doctors provide care without the influence of corporate motives, can be substantial in divorce cases, as non-professional spouses would not have the right to obtain shares of their physician spouse’s practice-related assets, even if they technically qualify as “community property” under the Texas Family Code.
For example, spouses who own a sandwich shop may choose to continue co-ownership of the business after divorce, buy out the other’s share of the business, or even obtain certain assets from the business itself. Unless both spouses are licensed professionals or own a practice together (which can happen in medical, dental, psychological, and other licensed fields), splitting ownership of a medical practice is not possible under regulations like the CPM doctrine. Divorcing spouses will need to arrive at settlements based on the divisible value of the practice or leave it up to the court to decide.
Other Important Considerations
- Being open with your attorney – Whether you are a doctor or a non-professional spouse, being open with your divorce lawyer is the most effective way to ensure you’ll receive the personalized counsel you need. Failing to disclose potential issues which may arise in a case can only make for surprises and increase the risks of poor outcomes that could have been prevented with proper preparation. That means discussing what’s relevant to your case, such as any
- problems with finances or the practice
- professional disciplinary action from the Texas Medical Board or another professional licensing authority
- contractual agreements between partners and practice owners (such as agreements that may stipulate the forfeiture of stock but allow for buying back that stock after a divorce)
- various funding, financial, and liability-related issues.
It also includes potentially damaging personal information, such as alleged adultery where funds are spent outside of the marriage, domestic violence or child abuse, suspected hidden assets, and more. Qualified lawyers can help deal with these issues with a front-footed approach and create tailored plans to address them accordingly.
- Choosing an experienced team – Given the complexities of valuing a medical practice, addressing various personal and professional issues, and exploring creative solutions to unique challenges a professional practice or license may create during divorce, legal representation is critical. However, as with doctors and specialists, not all lawyers who practice law or even family law have the knowledge, skill, and requisite experience to handle complex cases involving doctors, medical practices, and other complicated financial matters. Doctors and non-licensed spouses need to work with attorneys familiar not only with divorce and family law, but also business valuation and asset tracing, Texas laws and regulations regarding physicians and other licensed professionals, complex financial matters, and more.
- Reaching a resolution – As mentioned in previous blogs and in this very post, it often becomes necessary to structure various options for negotiating settlements (i.e. buyouts, transferring, or adjusting spousal), especially in terms of finances, property division, and issues relating to a medical or professional practice. Given the laws that bar non-licensed individual from practicing medicine, both practitioners and non-licensed spouses should consider the value of being open to options, negotiations, and alternative ways for reaching resolutions in a cost-efficient and more “controllable” matter. The alternative, which may be the only option in certain cases (such as those involving heated disputes, hidden assets, and more), is to take a case to trial, and leave the fate of your future in the hands of a judge who may or may not hand down a ruling with which you’ll agree with.
Coker, Robb & Cannon, Family Lawyers: A Firm Led by Board Certified Family Law Specialists
Coker, Robb & Cannon, Family Lawyers is led by Duane L. Coker, Kelly K. E. Robb, and Jacqueline Cannon, each of whom are among a small percentage of Texas attorneys to be Board Certified in Family Law by the Texas Board of Legal Specialization. Along with our talented team of Associate Attorneys, paralegals, and support staff, our team is committed to providing high-quality, personalized representation to clients from all walks of life across Denton County, Collin County, and beyond.
Call (940) 293-2313 or contact us online to discuss a potential divorce or family law case.