Attorney
Research has shown that the health of someone’s mouth is closely tied to their overall well-being. Whether this is correlation or causation is up for debate, but the bottom line is dental hygiene matters. Taking care of your teeth today is a small step you can take to improve your long-term health outcomes.
And this is not the only area of life where small actions have big long-term impacts. Attorney Bob Matteucci sees it all the time in the family law context. Snap decisions made in anger, and people whose only focus is how quickly they can get divorced, often ignore the long-term implications of their actions.
Bob, like many dentists, works to persuade his clients that spending a little bit more time and attention on the here and now will pay off in the end — particularly when a divorcing couple must divide the value of a dental practice up in order to dissolve their marriage.
New Mexico’s Community Property Law and Your Dental Practice
Many Albuquerque area dentists and other professionals like accountants, doctors, and real estate investors are shocked to discover that filing for divorce can have a devastating impact on their business. This is because New Mexico is a community property state, meaning couples are presumed to own all assets that increase in value, or are acquired during the marriage, jointly. And the value of these jointly owned assets must be split 50/50 during a divorce.
So, whether your spouse is a fellow dentist at your practice, works in a completely different industry, or is a stay-at-home parent, they have a legal claim to 50% of your dental practice if you get divorced.
Treatment Plan: Options for Dividing the Dental Practice
Splitting up a business isn’t as simple as dividing by two. Most of its value is illiquid, so you can’t just hand it over. And even if you could, giving control of half of a dental practice to someone who may or may not even be a dentist effectively destroys its ability to function.
The solution to this problem is to divide not the practice itself, but the value of it. And this is a multi-step process.
First is figuring out how much of the practice should be considered community property.
- Was the practice established before the marriage?
- Is there a pre or post nuptial agreement covering the practice?
- Are there other owners whose interests must be considered?
Next it is time to bring in a professional business appraiser to assess the value of the dental practice. If it is to continue operating post-divorce instead of being sold off, they must consider:
- Revenue and profit trends
- Equipment and office assets
- Patient base and goodwill
- Outstanding debts and liabilities
- Market trends for dental practices
While this is happening, it may be wise to bring in a business consultant or take other steps to ensure the practice continues to operate smoothly during and after the divorce. Failing to protect the value of the practice could lead to accusations of financial waste or open you up to other legal risks.
Finally, it is time to consider how best to divide the calculated value.
- The simplest path forward is selling everything off, winding down the practice, and dividing the resulting profits by two. But this is not a viable option for dentists who want to continue to work in their field.
- Equally simple sounding, but magnitudes more difficult in reality, is keeping things as-is. If both you and your soon-to-be-ex-spouse both work in the practice, just make the transition from romantic partners to business partners.
- A more realistic option is buying out the spouse who doesn’t work in the practice, or at least doesn’t want to work there post-divorce. This may involve taking on a substantial amount of debt.
- The solution Attorney Bob Matteucci is brought in to negotiate most often is one where the spouse that doesn’t care about owning part of the practice going forward takes a greater share of the couple’s other assets (like real estate or retirement accounts) instead of their share of the dental practice. In some cases, the person walking away from the practice may also get some sort of alimony payment to make things equal.
Just as every patient requires a different treatment plan, so does every divorce involving a dental practice. The path taken will have a long-term impact on the careers and financial prospects of both partners, so it is wise to take time to consider the pros and cons of each path forward. Attorney Matteucci can help you weigh your options and guide you through the divorce process.
Serving Families with Dignity & Compassion
If you’re a dentist in New Mexico facing divorce, Attorney Bob Matteucci is here to help you navigate the legal and financial challenges ahead. Taking the right steps today can ensure that your practice—and your future—stay healthy and strong as a regular flosser’s teeth. Contact Bob today to schedule a meeting.