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 governing documents of your practice, such as a buy-sell agreement, may outline the terms for a buyout during a divorce. Typically, divorce attorneys will seek an independent valuation from a credible expert. In cases where business partners divorce, it’s advisable to have your lawyer consult with a tax accountant to structure the buyout properly and avoid unexpected tax issues. Buyouts can occur as a lump sum or through installment payments. Goodwill can significantly influence the business's valuation. It's wise to compare appraisers and choose one who follows the Uniform Standards of Professional Appraisal Practice (USPAP). In Pennsylvania, which follows equitable distribution laws, the division of property and debts must be fair and equitable, though not necessarily equal. Courts have broad discretion in determining what is equitable, and their decisions are typically upheld unless there is clear evidence of abuse of discretion.
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.