WHAT ISSUES ARE UNIQUE TO DOCTOR DIVORCES IN FLORIDA?
Updated: Apr 10, 2020
Divorces can be complex legal matters, and when one or more of the spouses are doctors, a divorce can be even more complex. Issues that can complicate physician divorces include business valuation(s), increased earning potential and spousal support issues, and finally, busy and fluctuating schedules and time-sharing with minor children.
· Can the Practice Be Marital Property?
Every business owner is concerned that a divorce will negatively affect his or her business; however, to doctors, this fear is often very more personal given their intimate involvement in their practices.
In Florida, the Court “equitably” distributes all marital assets and liabilities. While “equitable” distribution does not necessarily mean “equal” distribution, that is the default result. If a business, including a medical practice, was established during the marriage, it is legally considered “marital property.” Where only one spouse is a doctor, the law is clear that the business should be awarded to the doctor, and not owned jointly by the spouses post-divorce. In such a case, the business must be valued and the other spouse will receive a credit for the marital value of the practice kept by the physician. Experienced and competent family law counsel is extremely important, because flawed legal arguments as to business valuations could result in over-valuation of the portion of the medical practice that is actually subject to distribution. The court must value the practice, and the first step is retaining a competent and well-qualified business evaluator. The business evaluator, in ascertaining the distributable value of the practice, may take into consideration property and assets of the business, such as medical equipment and accounts receivable, as well as intangible assets, such as goodwill. Generally, goodwill refers to “the advantage or benefit a business has beyond the value of its property and capital.” Swann v. Mitchell, 435 So. 2d 797, 799 (Fla. 1983).
Critically, there are two types of goodwill: personal and enterprise. Personal goodwill relates to a specific individual, based on his or her ability or reputation. Enterprise goodwill, on the other hand, refers to an entity’s ability or reputation as a business. In the context of a physician’s medical practice, enterprise goodwill often requires an analysis of a practice’s ability to attract and maintain patients, despite any potential change in physicians employed. If you are a physician with a medical practice, the more that your business’ goodwill is “personal” to you, the lower the distributable value will be for the purposes of divorce. If you are the party keeping the practice, this means that the court’s “equitable distribution” should result in less assets being awarded to the other spouse to make-up for the practice being awarded to you.
Because personal goodwill is not subject to distribution as a marital asset upon divorce, determining how much of a medical practice’s goodwill is enterprise versus personal is critical for equitable distribution. Thus, goodwill claimed as a marital asset must include the value of the medical practice, independent of the physician-spouse’s continued presence or reputation. It is the burden of the party claiming goodwill as a marital asset to produce evidence of such goodwill.
· Can the Value of a Medical Degree Be Distributed if Paid for With Marital Assets?
The legal answer to this question is a clear and unequivocal “no.” A college or professional degree is not subject to distribution because it would be too speculative to value same. Yet, student loan debt that accrues during the marriage, can be considered a marital debt. A physician’s divorce counsel should be prepared to know and understand the case law in this respect.
· Will Alimony Be Awarded to the Non-Doctor Spouse?
The answer to this question depends primarily on two things: (1) the length or the marriage and the evaluation of statutory factors; and (2) one spouse’s need and the other spouse’s ability to pay alimony. The standard of living during the marriage should be considered in determining whether there is a need for alimony. A common scenario in doctor divorces is where the non-doctor spouse worked to help support the other spouse through medical school. A non-doctor spouse might also argue that the other spouse forfeited a promising career so that the other spouse could pursue his/her career as a doctor. In Florida, there is no formula to determine entitlement to, or amount of, spousal support, and it is instead a very fact and evidence driven determination. Thus, it is important to retain legal counsel who is familiar with the case law, the legal arguments to be made, and the type of evidence that needs to be presented to obtain the best possible result.
· How Are Busy Schedule and Time-Sharing Issues Addressed?
If a married couple has minor children, time-sharing can be one of the most contentious and litigated issues in a divorce. Such issues can be compounded in a divorce involving a doctor, who works long, irregular and/or taxing hours. These issues can often be resolved by competent and creative attorneys and mediators through outside-the-box settlement negotiations, in a manner that satisfies all parties involved. However, if time-sharing must be litigated, it is important that the appropriate evidence be presented to satisfy any concerns that the court might have regarding the parent’s schedule and work demands.
· Time Consuming Litigation and Discovery Matters.
Since a doctor’s job is already time consuming and taxing, it is important that experienced and adaptive divorce professionals are utilized to ensure that the stresses of litigation on the client, including evaluating, preparing, and responding to discovery requirements, are mitigated, and the necessary work can be done around the client’s schedule.
A doctor’s divorce can be scary for the client, because of the number of complex issues involved, and the financial, emotional, and reputational risks. In order to protect your assets, income, estate, and relationship with your children during a divorce, you should contact knowledgeable and experienced divorce counsel. If you are a physician considering divorce, the attorneys at Jeffrey Law, PA, stand ready to consult and assist. Contact us at: Office@RSJLegal.com or 305.222.7921, to schedule a consultation.
Robert Stone Jeffrey, Esq., is an attorney admitted to the Florida Bar in 2010, the United States District Court for the Middle District of Florida, the United States District Court for the Southern District of Florida, and the Supreme Court of the United States. Mr. Jeffrey has experience handling complex and high asset family law disputes, and has authored chapters in various publications relating to Florida family law. Mr. Jeffrey is currently a member of the Family Law Section of the Florida Bar Rules and Forms Committee. Mr. Jeffrey was named a 2019 "Top Up and Comer" by South Florida Legal Guide and a "Rising Star" by Superlawyers (2019 and 2020), and was awarded the prestigious AV Rating by Martindale-Hubbell (2017 – 2020), as “Peer Rated For Highest Level of Professional Excellence.” Robert also has a perfect 10/10 rating by Avvo.com. Various client reviews can be accessed online. See https://www.martindale.com/attorney/robert-stone-jeffrey-157166604/. More information about Mr. Jeffrey, and Jeffrey Law, PA, can be found at www.rsjlegal.com.
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