You may have heard that roughly one-half of all first marriages end in divorce, but did you know that the divorce rate is 10 to 20 percent higher for physicians? Experts attribute this increased risk to their busy, stressful schedules.
Physicians not only need to be aware of the implications of divorce, they also need to be aware of the steps they can take to minimize any professional damage that can occur when doctors divorce.
Physician divorces can be complex with high dollar amounts at stake, which makes it extremely important for both spouses to be represented by experienced family law attorneys. Frequently, these attorneys will be Fellows in the prestigious American Academy of Matrimonial Lawyers, who are recognized by the bench and bar as the leading practitioners in the area of matrimonial law.
Physician divorces often involve many complex issues that require special attention, including:
Alimony / Spousal Support
As you might expect, divorce cases for professionals with high incomes usually include a claim for alimony or other spousal maintenance. In South Carolina, there are many different types of alimony, some of which are long-term and can translate into hundreds of thousands of dollars. Therefore, it is even more important that this issue be handled correctly from the very beginning, or the higher earning spouse could suffer the consequences for many years to come.
In physician divorces, it is not uncommon for the other spouse to have worked to support the family while the physician was going to school, and that spouse will want consideration for their efforts when the parties divorce. If both spouses are physicians, the Court may consider whether one spouse ever had to curtail his/her practice for the other spouse's benefit. Of course, if the two spouses have similar incomes, it can make this issue somewhat easier to resolve.
The physician's interest in his/her professional practice is a marital asset that must be allocated like any other. However, assigning a value to the practice in general (and the physician's interest in particular) can be difficult. How the issue of goodwill is handled and how to factor in ownership of expensive medical equipment can have a significant influence on the division of assets in the practice.
Cost of Unpaid Labor
In many practices, the physician's spouse serves as the de facto office manager, but is never formally paid. When the parties divorce, the unpaid spouse inevitably always wants the Court to consider the value of his/her labor that went into the practice and the contributions that he/she made to help build its value. Of course, this problem would have been avoided by paying the spouse a salary for his/her labor, which would have also helped maintain an earnings history for later use when trying to claim Social Security benefits. If the spouse's income is not needed at the time, it can always be invested (whether entirely or in part) into a tax-protected retirement account.
Many physicians tie up a significant part of their net worth in retirement or investment accounts that cannot be accessed without penalty until they reach retirement age. Dividing up liquid or easily transferrable assets is one thing, but determining the most efficient, least costly, and best way to allocate these “illiquid” assets is a complex process that is best handled by an experienced legal team, which may include CPAs and/or other experts.
Ben Stevens is a Fellow in the AAML, and he has represented many physicians, attorneys, politicians, executives, and other high net worth professionals in Family Court. He understands the unique types of issues that these professionals and their spouses face when they divorce. If you would like to schedule a consultation with Mr. Stevens to discuss the facts of your case, you are welcome to contact our office at (864) 598-9172.
Source: “Divorce: How to Make Sure the Dissolution of Your Marriage Doesn't Take Your Practice With It” by Debra Beaulieu, published at Medical Economics.