Navigating property division proceedings during divorce requires an understanding of the “marital estate.” People need to identify the resources they own jointly with their spouses to negotiate a reasonable settlement.
Misconceptions about the nature of certain assets can lead to conflict and disappointed expectations. Some people assume that a business or professional practice is the separate property of a spouse who started the business and whose professional services generate the revenue for the business.
If one spouse did not play any significant role in establishing a professional practice, does the other spouse retain the entire value of it after a divorce?
Professional practices are often partially marital assets
The timing of when someone started their practice, the resources they use to maintain the business and even the presence of a marital agreement can influence whether or not it is legally considered separate or marital property. Most of the time, professional practices started during marriage are part of the marital estate.
Even professional practices begun before marriage can be partially subject to division during divorce, as the appreciation in value during the marriage may be part of the marital estate. Spouses may need help tracking the growth of the business and estimating what it is worth. They may also need assistance as they negotiate for reasonable property division terms.
Getting legal guidance from someone experienced in complex property division matters can help those concerned about fairness when one spouse owns a professional practice. It is often possible to account for the value of a practice without liquidating the business or imposing joint ownership on the couple after the divorce.
