Full question:
My wife and I are divorcing after 43 years of marriage. We jointly own 60% of my medical (pediatric) practice, She is demanding a buyout (which neither I nor the practice can afford). I have offered generous alimony (50% of my salary and health insurance) and suggested that she hold her ownership position in the Practice. Her attorney continues to insist on a 'buyout'. The Practice is essentially worth very little (mostly goodwill) although 'valued' at $2 million. Can I be forced to sell out? What recourse do I have?
- Category: Contracts
- Subcategory: BuySell Agreements
- Date:
- State: Pennsylvania
Answer:
The bylaws or other documents, such as a buy-sell agreement or shareholder agreement governing the business may provide the governing terms for a buyout in the event of a divorce. Often, divorce attorneys will require an independent, objective value and a credible expert witness. Generally, when business parners divorce, it is recommended to have your lawyer consulting with your tax accountant in terms of how to structure the buyout and to make sure you have no unanticipated tax consequences. Buyouts may be made in a lump sum or over time in installments. Goodwill may be a significant factor in the valuation of certain businesses.
There are many appraisers available and it is a good practice to shop around and compare qualifications and fees. The are appraisers who specialize in business appraisals. When seeking an appraisal, it is recommended to use individuals who operate under the Uniform Standards of Professional Appraisal Practice (USPAP).
Pennsylvania is a so-called "equitable distribution" state. This means that the division of property and debts between the divorcing parties should be fair and equitable, but not necessarily equal. The trial court's discretion will not be disturbed on appeal without a showing of clear abuse, and the court has wide discretion in making an equitable distribution.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
