Physicians: When Do You Need A Postnuptial Agreement?
This article was prepared by Robert S. Hoffman, board-certified family law attorney, who has been practicing for 31 years in Houston, and Jennie R. Smith,
an attorney in the Law Office of Robert S. Hoffman, PLLC.
More information can be found at www.rhoffmanlaw.com
Why would marital partners ever sit down and negotiate a postmarital agreement or marital property agreement unless they are literally on the verge of divorcing? And what if they already have a prenuptial agreement? Shouldn’t that be all they need?
There are actually a number of reasons why physicians, in particular, may find it advisable to establish a postmarital agreement, whether they already have a prenuptial agreement or not.
- Perhaps one or both partners are considering the possibility of divorce but not yet ready to end the marriage. Working out an equitable division of property can sometimes even ease financial tensions and anxiety in the marriage and prevent divorce.
- The physician in the marriage may want to transfer property to his/her spouse to protect it from possible medical malpractice suits or from creditors.
- If the couple has been married for a number of years, their financial situation may have changed radically. A medical practice, or a partnership in a practice, may have become much more valuable over the years.
What if a non-medical spouse has contributed substantially to building the practice by, say, managing the office or the financial accounts and records? How will this partner benefit in the event of a divorce or death? The choices made in drafting a prenuptial agreement may no longer be appropriate or relevant for current conditions.
- Doctors often have passive investments in various medical facilities, which may include emergency medicine centers, imaging centers, surgical facilities, compounding pharmacies, etc. How are these interests to be allocated if they divorce?
- The doctor’s situation may be even more complex if both spouses are doctors in separate practices, or if they are partners in the same practice. Unwinding these complex relationships and allocating assets can be critical to both partners’ financial future.
- Physicians often establish elaborate trusts, family limited partnerships, or other complex estate-planning vehicles as part of an estate plan, but do not realize that these arrangements may have provisions that conflict or are incompatible with a party’s divorce goals. Any physician contemplating the possibility of divorce at some point should definitely ask a family law attorney to review all of his or her estate planning.
- The physician may want to make sure that he or she has provided for children by a previous marriage or marriages in case of divorce or death.
The important point here is that a postmarital or marital property agreement should provide a “global” analysis of all separate and community property and a rational guide to allocating all of these assets. This may require the assistance of other experts in estate planning, accounting and financial valuation, real estate, tax, analysis of corporations and limited partnerships, etc. But the overarching reason for such an agreement is that it is far less expensive than fighting out the same issues in court.
This article offers general legal information not pertaining to specific, individual circumstances. No attorney-client relationship is formed with readers.