Divorce can be incredibly complex when one or both spouses own a medical practice. In Illinois, business assets—including medical practices—may be considered marital property, subject to equitable distribution under 750 ILCS 5/503. Whether a practice was established before or during the marriage, its value, ownership structure, and revenue streams can significantly impact the division of assets. Michael C. Craven works closely with his clients to protect their financial interests during divorce proceedings in Chicago.
Determining If A Medical Practice Is Marital Property
Under Illinois law, a medical practice is classified as marital or non-marital property based on when and how it was established:
- If the practice was founded before marriage, it may be considered non-marital property.
- If the practice was established during the marriage, it is generally considered marital property, even if only one spouse owns or operates it.
- If a spouse contributed to the practice financially or professionally, they may have a claim to a portion of its value or reimbursement.
Valuing A Medical Practice In Divorce
Accurate business valuation is necessary when dividing assets. Courts consider several factors when determining the value of a medical practice, including the following:
- Revenue And Profitability – The practice’s financial records, income, and expenses.
- Tangible Assets – Equipment, office space, and other physical assets.
- Goodwill And Reputation – The value of patient relationships and community standing.
- Accounts Receivable – Outstanding payments and future revenue potential.
- Partnership Agreements – Contracts affecting ownership rights and transferability.
Illinois courts typically require business appraisers and financial experts to determine an accurate valuation of a medical practice and income streams therefrom.
Strategies To Protect A Medical Practice
To prevent disruptions to business operations, medical professionals should take proactive steps to protect their practice in divorce proceedings:
1. Using Prenuptial Or Postnuptial Agreements
A legally binding prenuptial or postnuptial agreement can define ownership rights and protect the practice from becoming marital property.
2. Structuring The Business Properly
If the practice is structured as a professional corporation or partnership, shareholder agreements can prevent involuntary ownership transfers due to divorce.
3. Offering A Buyout Settlement
Instead of dividing the practice, a business-owning spouse can negotiate a financial settlement to buy out the other spouse’s interest.
4. Limiting Spousal Involvement In The Practice
If a spouse has worked in the practice, they may have a stronger claim to ownership. Keeping roles separate can reduce complications.
5. Avoiding Commingling Of Assets
Using marital or joint funds to finance the practice may cause issues. Keeping business finances separate is essential.
Dividing A Medical Practice In A Divorce FAQs
How Is A Medical Practice Divided In A Divorce?
Illinois follows equitable distribution laws, meaning a medical practice’s value is not automatically split 50/50. Instead, courts assess ownership, financial contributions, and business valuation before determining a fair division.
Can A Medical Practice Be Considered Separate Property?
Yes. If the practice was established before marriage, it may be classified as non-marital property. However, if marital funds or efforts contributed to the practice’s growth, the division of the practice may become more complex.
How Can I Keep My Medical Practice If I Am Going Through A Divorce?
You likely will retain full ownership of your medical practice, subject to compensating your spouse for his or her interest if it is marital property.
Will My Spouse Have Access To Patient Records During Divorce Proceedings?
No. Patient confidentiality laws, including HIPAA, protect medical records from being shared in divorce proceedings. However, financial records related to the practice may be reviewed for valuation purposes.
What If My Spouse Worked In My Medical Practice?
If a spouse contributed financially or operationally, they may have claims for compensation related to their marital contribution or based upon separate rights as an employee. .
Can A Non-Physician Spouse Claim Ownership Of My Medical Practice?
Under Illinois law, non-physicians cannot own a medical practice. However, they may still claim a financial interest in the practice’s value and the physician spouse’s income.
Call Michael C. Craven For Exceptional Representation
Protecting a medical practice during divorce requires careful planning and strategic negotiation. Michael C. Craven helps medical professionals secure their business interests while ensuring a fair divorce settlement.
Contact Chicago divorce attorney Michael C. Craven at (312) 621-5234 to schedule a consultation. We represent clients throughout Chicago and the surrounding areas.
