Owning a dental practice is not just a profession—it’s a major financial and personal investment. But what happens when life takes an unexpected turn, such as a divorce or bankruptcy? These situations can have significant legal and financial implications for practice owners, affecting everything from ownership rights to business viability.
Without proper legal planning, a divorce could result in your practice being considered marital property, leading to potential division or buyout negotiations. Likewise, financial hardship and mounting debt could put your practice at risk in a bankruptcy proceeding. Whether you're proactively protecting your business or currently facing one of these challenges, understanding your legal rights is crucial.
This guide will explore how divorce and bankruptcy can impact your dental practice, what steps you can take to safeguard your business, and why working with an experienced attorney is essential in navigating these complex legal matters.
Divorce and Dental Practice Ownership
Is Your Practice Considered Marital Property?
One of the biggest concerns for dentists going through a divorce is whether their practice will be considered a marital asset. The answer depends on various factors, including when the practice was established, how it was funded, and state-specific divorce laws (community property vs. equitable distribution).
If the practice was started before marriage, it may be considered separate property. However, if marital funds were used to grow the business, or if a spouse contributed to the practice’s success (even indirectly), they may have a claim to a portion of its value.
Valuation and Division
If a dental practice is deemed a marital asset, the next step is determining its value. Courts often require a professional valuation that takes into account revenue, goodwill, assets, and patient base. The valuation will play a key role in deciding how the practice is divided in the divorce. Common outcomes include:
Planning ahead can make all the difference in ensuring you retain control of your practice during a divorce.
Bankruptcy and Your Dental Practice
Can a Dental Practice Be Affected by Bankruptcy?
Bankruptcy can be a viable option for those facing overwhelming debt, but it comes with significant consequences for dental practice owners. The impact depends on the type of bankruptcy filed—Chapter 7 (liquidation) or Chapter 13 (reorganization) for individuals, and Chapter 11 (reorganization) for businesses.
What Assets Are at Risk?
Whether your practice is at risk depends on factors such as business structure, debt classification, and available exemptions. Key considerations include:
How to Protect Your Practice in Bankruptcy
Navigating bankruptcy while maintaining your practice requires strategic planning and legal guidance to minimize financial losses and protect your livelihood.
The Importance of Hiring an Attorney
Divorce and bankruptcy are complex legal matters that can have lasting consequences on your dental practice. Having an experienced attorney by your side is crucial to protecting your business, assets, and professional future.
Why You Need Legal Guidance
Legal challenges don’t have to mean the end of your practice. With the right attorney, you can develop a strategy to safeguard your business and move forward with confidence.
Final Thoughts
Owning a dental practice is more than just a career—it’s a long-term investment that requires careful legal and financial planning. Whether you’re facing a divorce or financial hardship, the right strategies can help you protect your business and ensure its continued success.
By understanding how divorce and bankruptcy impact your practice, taking proactive steps to safeguard your assets, and working with an experienced attorney, you can navigate these challenges with confidence. Legal hurdles may feel overwhelming, but with the right guidance, you can secure the future of your practice and your professional legacy.
Contact Dental & Medical Counsel for Help Protecting Your Dental Practice
At Dental & Medical Counsel, we understand the unique legal challenges that come with owning a dental practice. Whether you're navigating a divorce, facing financial difficulties, or looking to safeguard your business for the future, our experienced team is here to help. We provide tailored legal strategies to protect your assets, minimize risks, and ensure the longevity of your practice. Contact us today to speak with a member of our team about securing your dental practice.
Frequently Asked Questions
Q: Will my dental practice be considered marital property in a divorce?
A: It depends on factors like when the practice was established, how it was funded, and state laws. If marital funds contributed to its growth, your spouse may have a claim to part of its value.
Q: How is a dental practice valued during a divorce?
A: A professional valuation considers revenue, goodwill, assets, and patient base. The valuation determines how much of the practice, if any, is subject to division.
Q: What options do I have if my spouse is entitled to part of my practice?
A: Common solutions include a buyout (paying your spouse for their share), co-ownership (rare but possible), or selling the practice if no other option is viable.
Q: Can a prenuptial or postnuptial agreement protect my dental practice?
A: Yes. These agreements can specify that the practice remains separate property in a divorce, preventing disputes over ownership.
Q: What happens to my dental practice if I file for bankruptcy?
A: The impact depends on the type of bankruptcy. Chapter 7 may require liquidation of business assets, while Chapter 13 or Chapter 11 allows for debt restructuring to keep the practice running.
Q: Will I lose my dental equipment and office property in bankruptcy?
A: It depends on the bankruptcy type and your business structure. Some assets may be exempt, while others could be liquidated to pay creditors.
Q: Can my personal assets be at risk if my dental practice has business debt?
A: If you personally guaranteed loans for the practice, creditors may go after personal assets unless your business is structured to limit liability, such as an LLC or corporation.
Q: How can I protect my dental practice from bankruptcy risks?
A: Proper business structuring, asset protection strategies, and negotiating with creditors before filing for bankruptcy can help safeguard your practice.
Q: Should I consult an attorney if I’m going through a divorce or financial hardship?
A: Absolutely. A legal expert can help protect your practice, negotiate fair terms, and guide you through complex legal processes to minimize risks.
Q: How can Dental & Medical Counsel assist me in protecting my dental practice?
A: Our experienced attorneys specialize in legal strategies for dental practice owners, helping with asset protection, divorce settlements, bankruptcy planning, and business structuring to secure your practice’s future. Contact us today to learn more!
At Dental & Medical Counsel, we've been instrumental in realizing the practice goals of countless dentists. Whether you're looking to purchase, launch, or sell a dental practice, our expertise is your guide. Beyond the initial stages, we're committed to ensuring your dental practice remains legally compliant.
We provide comprehensive support, including employment law protections, dental contract reviews, and assistance with dental employment agreements. Additionally, we specialize in incorporating dental practices and securing trademarks. And for long-term planning, our services extend to helping dentists with succession and estate planning. Trust us to be your partner in every step of your dental practice journey.
About Ali Oromchian, Esq.
Your Dental Lawyer
Ali Oromchian, JD, LL.M., is a leading legal authority in dental law and the founding attorney of Dental & Medical Counsel, PC, with over two decades of experience. His deep connection to dentistry comes from his wife's nearly two-decade-long career as a pediatric dentist.
This personal insight fuels his dedication to empowering dentists to navigate their legal challenges and achieve their practice goals. In doing so, Ali has helped thousands of doctors open their practices while maintaining legal compliance.
Ali is frequently quoted and contributes articles to dental publications, including the California Dental Society, Progressive Dentist, Progressive Orthodontists, Dentistry Today, Dentaltown, and The New Dentist magazines, further showcasing his commitment to the dental community.