For many professional practices, the main factor in the valuation of the business is goodwill or the value of the practice’s reputation and base of existing clients. Valuing goodwill is obviously more complicated than valuing real estate or equipment. The date on which a professional practice is valued can be extremely important to both the business interests of the professional and the community property interests of the spouse.
In many cases, professionals practice in a variety of different business entities over the course of their careers. For instance, a partnership may be formed or broken up, or a practice may be reorganized in order to take advantage of limited liability protections. We have experience in examining the extent to which goodwill has transferred from one entity to another. We are highly attentive to this issue, as a motion prior to trial may be necessary.
Another major issue when it comes to the impact of divorce on professional practices is the degree to which the value of the practice is divisible as community property. Obviously, a professional degree cannot be divided. However, if the spouse contributed to the cost of an education (including the cost of living), he or she deserves a fair return on that investment.
Though professional practices are similar to small businesses in many ways, they also have some unique characteristics. When a practicing professional is involved in a divorce, both sides must address some particularly complicated issues. At the Cianci Law, PC, we counsel professionals and their spouses on the implications of California divorce and community property laws for professional practices. Every case is unique, and there are no generalities to rely on regarding these issues.
At our law firm, we work with credible experts to establish the value of professional practices such as:
Fields marked with an * are required