If you are a doctor with a thriving medical practice, then you probably have a lot to lose if your marriage were to end in divorce. Unfortunately, many doctors do not take the necessary steps to protect their businesses from the devastating effects of divorce, which include a decrease in income, loss of assets and a possible change in ownership.
Establish a separate business entity
If your practice is not already organized as an LLC or corporation, then it is wise to do so before marriage. Doing so will help protect your business from the liabilities of divorce law and will make it easier to divide assets that may be considered marital property in a divorce situation. You can also enter into a prenuptial agreement that outlines the ownership of your practice and other assets.
Keep separate finances
When you have a business, it is important to keep your personal and business finances separate. All income related to the practice should be deposited in its own account, with all expenses being paid from that account as well. This is especially important if you are the sole proprietor of your practice. You should also ensure that all business documents and records are kept in a secure location, such as an off-site storage facility or safety deposit box.
Create a buy-sell agreement
A buy-sell agreement is essentially an insurance policy for a business in the event of the death or disability of a primary owner. If you are the sole proprietor of your medical practice, then it is important to have a buy-sell agreement in place that outlines what will happen to the business upon your death or if you become incapacitated due to illness or injury. This agreement can also provide protection in the event of a divorce.
Review your practice’s contracts
If you have staff or other contractors that are participating in the business, then it is important to review all of the contracts and agreements to make sure they will remain in effect if you become divorced. This includes any non-compete clauses that may be included in employee contracts.
While divorce is never an easy situation to navigate, taking the proper steps ahead of time can help protect your medical practice from the potential financial and legal consequences. It’s important to be careful and proactive in order to ensure the longevity of your business no matter what lies ahead.