Dividing Professional Practices in a Divorce

Chicago Divorce Property Division Attorney

Helping Divorcing Clients Divide Professional Practices in Illinois (lawyers, doctors, podiatrists)

Owners of professional practices – doctors, lawyers, and chiropractors – and their spouses face unique circumstances and issues when they divorce.  Business divorce attorney, Elliot Heidelberger focus’ on representing owners of professional practices and their spouses.  He helps them navigate the property division process, along with other issues they may face in divorce, such as business valuation and spousal maintenance.

Characterization of the Professional Practice

In a divorce, all marital assets are divided based on an equitable distribution, including business assets such as a professional practice.  Accordingly, business owners, including members of professional practices, should consult with an experienced Illinois divorce property division attorney, like Elliot Heidelberger, in order to ensure a favorable division of assets.

In Illinois, any asset acquired during marriage is considered to be “marital property” and must be equitably divided in a divorce. Even if a professional practice was established before the marriage, conditions may exist that convert it to marital property.  Even if the business has not been converted to marital property,  appreciation in the value of the business or  professional practice may  be considered marital property.  Moreover, if one spouse helped pay for the other spouse’s education or professional license, he or she may be entitled to additional funds in the property settlement or in the form of spousal maintenance .

Valuation of Professional Practice

When business assets such as a professional practice are subject to division in a divorce, proper valuation of the business is essential.  A variety of methods may be used to value the interest of each spouse in the business, and the use of an inappropriate valuation method can have a detrimental effect on the property distribution.

Business divorce attorney Elliot Heidelberger understands the importance of hiring a valuation expert to accurately determine the value of the business and its assets. He will work with property division forensic analysts, such as business appraisers, accountants and tax professionals, to evaluate issues relating to the fair market value of the professional practice, any appreciation to the value of the professional practice, tax consequences to the proposed property division, the value of any real estate assets, and whether goodwill associated with the professional practice considered marital property.

Importance of Goodwill in Valuing Professional Practice

An important component of the valuation of a professional practice is the value of the business’s goodwill – either enterprise goodwill or personal goodwill.  Enterprise goodwill relates to the professional practice’s reputation and ability to succeed without any individual professionals associated with the practice.  On the other hand, personal goodwill relates to a professional’s individual skill and reputation.  Enterprise goodwill is transferable to the value of the professional practice as marital asset, but personal goodwill is not transferable as a marital asset.

By working closely with property division forensic analysts, such as business valuators and accountants, the DuPage County business divorce attorney Elliot Heidelberger will strive to ensure that the professional practice is property valued in a divorce.  Along with financial experts, he will review the business’s financial statements, partnership agreements, buy/sell agreements, client lists, and other pertinent documents of the practice to accurately determine its value.

If you are a member of a professional practice or the spouse of a member of a professional practice, do not hesitate to contact the knowledgeable DuPage County divorce attorney, Elliot Heidelberger at our Naperville, Hanover Park or Chicago offices at (847) 497-5020 to learn more about the issues related to the division of your professional practice in a divorce.