When a spouse owns their own business in a Washington state divorce, that business is typically divided or bought out during asset division. But when Washington's community property laws give both spouses equal rights to the business as an asset, what happens when the business is a private practice? Going through a divorce for solo practitioners in Washington is more complicated and should be treated as such.
The Unique Case of Solo Practitioners and Divorce
A solo practitioner is a professional such as an attorney, doctor, accountant, etc, who has a specialized skill set required to operate their business. Their goodwill is what makes the business a functional entity, and without their skills the company would not exist as it does now.
Essentially, if the solo practitioner were no longer able to work for the business, that business would likely cease to exist as it does now. While it's true that another attorney or doctor with a similar skill set could come take over the practice, their goodwill would not be the same as the original solo practitioner.
These are factors that should be taken into consideration when valuating the business for division in a divorce. The goodwill of the solo practitioner is essential to the business' current existence, and therefore should be considered during the valuation and when deciding the fate of the business.
Solo Practitioners Have Important Decisions to Make During Divorce
There is no unique treatment for solo practitioner businesses during the asset division phase of divorce. Like any other type of business, the non-practitioner spouse has every right to his or her fair share of the business. The non-practitioner spouse is the one whose share of the business must be bought out.
As a solo practitioner, you must take great care to have your business properly valuated so your buyout offer does not leave you paying more than you should. Every business is valuated differently, and private practices may be difficult to properly evaluate. Make sure your business valuation professional is familiar with valuating solo practitioner businesses before you request your valuation.
Protect Your Solo Practice from Improper Valuation and Division
Small business owners of all types should understand the importance of a business valuation in their divorce. Do not let your asset division negotiations take away more than your fair share. The Law Offices of Molly B. Kenny is here to protect your assets and interests and help you get through your divorce and back to living your life. Call us at 425-460-0550 or fill out our online contact form and schedule a consultation to discuss your options.