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Will you lose your medical practice in a California divorce?

On Behalf of | Jan 19, 2023 | Divorce

Becoming a physician with your practice involves years of schooling, long hours and hard work. If you are a physician going through a divorce, you may worry that you will lose that practice due to California’s strict division of property laws.

Community property laws in California

California operates under community property laws. These guidelines dictate that divorcing couples split their assets 50-50. Important exceptions for community property laws in California include:

  • Assets obtained primarily before your marriage may belong to you as personal property.
  • Either partner committed domestic violence or attempted murder.
  • One of you misappropriated assets to exclude the other spouse.
  • Your debts exceed your assets.

Medical practice and community property

The court will consider your medical practice the same way they think any other business in a high-asset divorce. Community property division rules apply to any medical practice you begin after marriage. If you started your practice after marriage, any increase in value might qualify for a 50-50 split under community property laws. The courts may consider these factors to determine whether your spouse deserves compensation for your medical practice:

  • The number of years your practice operated before your marriage
  • Any contributions your spouse made to the practice
  • Any actual working roles your spouse took in the practice
  • Your spouse’s overall positive attitude toward the practice

Your spouse’s compensation

According to California law, unless your spouse also works as a physician, they cannot become a partner in your practice. Instead, courts will consider the expertise of neutral appraisers who estimate your practice’s value. You may offer other assets equal to half that amount to satisfy community property requirements.

In general, physicians in California rarely lose their practice in a divorce. However, you will still owe your spouse compensation for contributing to its growth.