If you and your spouse built a professional practice together, deciding what happens to the business may become one of the biggest questions during your divorce. Beyond its financial value, the practice may support your household, employ a team and serve clients or patients who depend on it. You may also worry about whether the practice can continue operating while your divorce is pending.
Arizona courts do not treat every shared practice the same way. Instead, the court will consider your ownership interests, the value of the practice and other facts unique to your situation before deciding how the business fits into the overall division of marital property.
Why shared practices can be more complex
A professional practice is an operating business, so dividing it involves more than assigning a dollar value. When you and your spouse own a practice together, the court will generally consider factors such as:
- The ownership structure of the practice
- Whether the practice is community property, separate property or both
- The practice’s value
- Any agreements that affect ownership rights
- How different property division options could affect the business
These factors help the court determine how the practice fits within the overall marital estate.
How a shared practice may be divided
Arizona courts do not automatically divide a professional practice by giving each spouse half of the business. Instead, the goal is to reach a fair division of the marital estate. How the practice fits into that division will depend on factors such as its ownership structure, value and each spouse’s interest in the business.
In many cases, one spouse keeps the practice while the other receives other marital assets or a financial payment that reflects the business’s value. In some situations, the spouses may agree to sell the practice and divide the proceeds.
Although less common, former spouses may continue owning or operating the practice together if that arrangement supports the business and both parties agree to it.
What can make these cases more complicated?
Certain facts can make dividing a shared professional practice more challenging. These may include:
- Disagreements about the practice’s value
- Business debts and financial obligations
- Ownership interests held by other partners
- Licensing rules that affect ownership or management
- Each spouse’s contribution to the practice during the marriage
The court may also review financial records, ownership documents and business valuation evidence when deciding how the practice should be treated as part of the marital estate.
Looking beyond the business
Your professional practice is only one part of the property division process. The court will also consider your other marital assets and debts before reaching a final decision about the marital estate.
Because a shared professional practice combines business ownership with family law, property division may involve questions that do not arise with other assets. Knowing what factors the court will consider can help you better understand what to expect if your practice becomes part of your divorce.