Many successful professionals choose to run their own practices. It takes a lot of commitment and personal investment to build a thriving professional practice, but doing so can give someone with an education the opportunity to be their own boss and afford their family a very comfortable standard of living.
For a dentist, architect or physical therapist operating a successful practice in Massachusetts, divorce could lead to a lot of stress and concern about the future operations of their practice. The three issues below may be among the matters they will need to resolve as early as possible in divorce negotiations if there is no prenuptial or postnuptial agreement in place dictating how these issues will be resolved.
What happens with staffing or employment
It is very common for professionals to hire their spouse or other immediate family members to help manage their professional practices. Someone might hire their spouse or mother-in-law to serve as their administrative assistant or their retired father-in-law to provide facility services. The decision to divorce can therefore impact a spouse and other members of the family by affecting their employment arrangements. It is often necessary to discuss future employment arrangements or severance agreements when the person who owns a professional practice decides to divorce.
What happens to ownership
It is common for people to operate a professional practice as a limited liability company (LLC) or other simple small business. They may be the sole owner on paper, but that does not mean that they are the only person with an ownership interest. If someone started the practice during their marriage, it would likely be marital property. Even a pre-existing practice could be partially marital property if someone used marital resources to invest in the business. It will be crucial for professionals to establish how much of the business is marital property for the purposes of property division negotiations or litigation.
What the company is worth
Business valuation is challenging because there are many different ways to establish a value for a company. Factors like future revenue and industry performance can influence what the company is worth, as can obligations and equipment depreciation. The process of establishing with the company is actually worth can have a major impact on other property division matters, which is why the process is often a major challenge.
Those who take the appropriate steps as they prepare for divorce will be in a better position to protect a thriving professional practice. Knowing what hurdles one will have to overcome makes it easier for individuals to prepare for divorce proceedings regardless of what their personal circumstances entail.