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Physician's divorce entails valuation of the medical practice

The divorce of a medical doctor in California is likely to deal with some common financial issues. The most critical of those issues will be placing a value on the doctor's practice for purposes of property division. Divorce negotiations involving a successful medical professional will often involve the use of an expert forensic accountant. Many of the same considerations will generally apply to the determining the value of other professional practices.

The expert will be brought into the case by the party's attorney. This will initially be done to get an early working assessment of the value of the practice. Later, if the case is not settled amicably, that expert will be a primary witness testifying at trial.

There are several questions to determine when a medical practice is being evaluated for property division purposes. One is the composition of the practice. Are there other doctors and do they all own stock in the business entity? Is there a written contract defining the ownership rights of the participants? How long has the practice existed, and was it started before or during the marriage?

The foregoing are but a few of the considerations that the expert and the marital law attorney will examine. All kinds of factors go into the value of a medical practice, including financial assets, equipment, furnishings, accounts receivable and the economic value of the goodwill built up by the practice over the years. The liabilities and expenses of the practice will also be computed and deducted accordingly.

The choice of the forensic expert is an important decision in the process, and the attorney will likely bring in one who is experienced in valuing California medical practices. Of course, the other side will have its own expert and the usual "battle of the experts" will be unavoidable. The experienced divorce attorney will know when and how to challenge the other side's expert and his or her findings.

Source: mdmag.com, "Most Critical Financial Step in Physician Divorce: Evaluating the Practice", Douglas R. York, Nov. 15, 2017

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