Divorce Issues


Nationally the average for first marriages ending in divorce is 43% while second marriages are as high as 75%. Various studies have shown that divorces involving one or more physicians happen anywhere from 10% to 20% more often than the national average for the general public. Next to taxes and professional liability, divorce is one of the biggest threats to a physician’s financial health.

No one ever wants to think about planning for divorce, but if it happens or you think that it might, what should you do?


Hire an attorney

The single most important step when you are thinking that a divorce is imminent is to hire an attorney who has experience with divorce proceedings. You don’t necessarily need the highest priced attorney, but rather one with significant experience in handling high income/high net worth individuals is best. Word of mouth is a great way to find an attorney, but be sure to interview a few choices to find someone you are comfortable with. Switching attorneys will be costly so it is best to pick the right one on the first try.


What is your spouse currently earning?

If your spouse is not currently working, has he or she ever held a job or been employed during your marriage? What is his or her educational background? These are key questions that your attorney will want to know in order to assist in determining your spouse’s income earning potential.


Learn everything there is to know about your family’s debt situation

Many physicians are heavily involved in home finances while others are so busy working that they have ignored their own family finances. Know what types of debt you have: school loans, credit cards, personal loans, mortgages and vehicle loans. Debt is often more difficult to allocate than assets, so being as prepared as possible about the source of the debt, payment structure, balances and collateral is very important.


Make a list of all family assets and make copies of all family finance records

You don’t need to include the kitchen sink, but a good rule of thumb is to include anything over $300 including all jewelry, paintings, and tools. Make copies of all bank statements, tax returns, life and health insurance policies, stock certificates, brokerage accounts, retirement plan accounts and other documents tied to your net worth. The more information you gather now, the less you will spend in fees in the long term with attorneys and accountants trying to recreate you personal financial status. Do not attempt to conceal assets. It will only serve to make the divorce process last longer and many undisclosed assets will be spent in professional fees trying to keep them hidden.


What is the family monthly household budget?

How much is spent on the mortgage, utilities, landscaping, snow removal, groceries, clothing, vacations, personal care and children’s activities? Often the records are in complete disarray; clean it up. If the judge asks for verification you need to be able to supply what is requested in a timely manner.


Protect yourself from the devious spouse

The horror stories abound, about the spouse who maxed out all the credit cards on the way out the door. It doesn’t happen in every situation, but it does happen. Paring down the number of cards available and separating bank accounts is often a good idea. Close whatever credit card accounts you can to limit activity. Separate cash accounts, but don’t spend them if possible until the proceedings are final. If joint accounts are separated, your spouse will only have access to empty out half of the family money.


Stay involved or become more involved in your children’s activities

It is easy for a physician to use the excuse about how busy they are. But when it comes to child custody and visitation, judges in many states look at past involvement to make determinations. This is not about how much you are going to pay in child support, but how involved you want to be in your children’s lives. Know who their teachers are, who their pediatrician is, what their allergies are. When seeking increased visitation and custody, you don’t want to have the judge ask you a simple question about little Johnny only to reply, “I don’t know.”

Normal divorce proceedings average nine to 18 months. In divorces where one or both party has substantial assets or earning potential, it can take much longer. The more prepared you are before filing, the quicker and more cost effective the divorce proceedings will be. Laws on divorce differ substantially state to state so please seek advice from an accountant or attorney in your state of residence.


Jenny L. Harmon, CPA, is a director with GBQ Physician Practice Group LLC. She has been heavily involved in practice startups, as well as aiding existing practices with billing issues, staff modeling and selection, project analysis, financial management, compliance issues, and tax planning. Jenny can be reached at (614) 947-5246.

GBQ Physician Practice Group LLC is also a proud member of the National CPA Health Care Advisors Association. HCAA is a nationwide network of CPA firms devoted to serving the health care industry. Members provide proactive solutions to the accounting needs of physicians and physician groups. For more information contact the HCAA at info@hcaa.com.

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