Your professional practice is more than a business, it’s the result of your years of hard work, sacrifice and dedication. But when divorce enters the picture, you may wonder what happens to everything you’ve built. In Wisconsin, the court could divide your private practice between you and your spouse. Hence, knowing how the process works can help you protect your professional license.
Determining which property your practice falls under
The first step in splitting your professional practice is figuring out whether it counts as a marital or separate property. In Wisconsin, the law considers most assets acquired during the marriage as marital property and that includes your practice.
However, if you started your practice before the marriage or used personal funds to build it, some or all of it may qualify as separate property. Thus, identifying this distinction early can make a significant difference in what you stand to keep.
Understanding how much your practice is worth
Once you establish your practice’s property status, the next step is valuing it. Determining the fair market value of a professional practice is more complex than simply looking at your income. With this, you will want to work with a legal professional and an independent valuation analyst. These experts can consider factors like revenue, client base, goodwill and liabilities. After all, an accurate valuation protects you from either overpaying or undervaluing your life’s work when splitting your practice.
Four ways to divide your practice
Once you establish a clear value, you can choose how to divide the practice. There are four common options:
- Buyout: You keep the practice and pay your spouse 50% of its agreed-upon value, often using other marital assets like retirement accounts or home equity.
- Asset offset: Your spouse receives a larger share of other assets, such as the family home, retirement accounts or luxury assets in exchange for giving up their claim on the practice.
- Sale of the practice: If a buyout isn’t possible, you can sell the practice and split the proceeds equally.
- Co-ownership: In rare cases, both you and your spouse can continue running the practice together though experts generally advise against this option.
Of course, each method comes with trade-offs, so choose the one that best fits your financial situation and long-term goals.
Protecting your professional future
Your professional license took years of dedication to earn and a divorce doesn’t have to put it at risk. Understanding your rights, knowing the value of your practice and choosing the right division method are all steps that can make this transition smoother. With the right support and knowledge on your side, you can protect what you’ve built and move forward with clarity and confidence.
