Whether you own the practice or are married to the chiropractor who does, you need to understand how New Jersey equitable distribution law may apply.
The practice may represent years of work, a significant source of income, and substantial marital value. Determining that value is rarely as simple as reviewing the balance in a business bank account.
New Jersey is an equitable distribution state. This means marital assets and debts are divided fairly, although not necessarily equally.
A chiropractic practice created or acquired during the marriage may be subject to equitable distribution, even if only the chiropractor’s name appears on the ownership documents.
If the practice existed before the marriage, part of its value may be separate property. However, any increase in value during the marriage could still become an issue, depending on how and why that growth occurred.
The analysis depends on:
A professional practice often includes both tangible and intangible value.
Tangible assets may include:
Intangible value may include:
Liabilities, operating expenses, taxes, and other financial obligations must also be considered.
Because these issues can be complicated, a qualified business valuation professional or forensic accountant is often needed.
The expert may review tax returns, profit-and-loss statements, balance sheets, payroll records, patient volume, owner compensation, debts, and other financial records to estimate the practice’s value.
A chiropractic practice can produce both an asset value and income for its owner.
Those concepts must be analyzed carefully because the chiropractor’s earnings may also affect alimony, child support, and the ability to fund a buyout.
The amount shown on a tax return may not tell the entire story. A valuation expert may examine:
The goal is to understand both what the practice is worth and what income it actually provides.
A chiropractic practice usually cannot be physically divided between spouses.
The more common solution is for the chiropractor to keep the practice while the other spouse receives value through the overall property settlement.
That may involve:
For example, the chiropractor might retain the practice while the other spouse receives a greater share of the equity in the marital home or another account.
In some cases, selling the practice may be considered. However, a sale is not always practical or financially desirable, particularly when the practice’s value is closely tied to the chiropractor’s personal services, licensing, reputation, and continued involvement.
Usually, the issue is receiving a fair share of the practice’s marital value, not becoming a co-owner or participating in patient care.
Professional licensing and business-entity restrictions can affect who is permitted to own or control a healthcare practice.
That is another reason these cases are commonly resolved through a buyout or an offset using other marital property.
Both financial and non-financial contributions may matter.
One spouse may have worked directly in the office, handled billing, managed employees, contributed money, or helped establish the practice.
A spouse may also have supported the business indirectly by managing the home, raising the children, or sacrificing career opportunities while the chiropractor developed the practice.
The court can consider those contributions when determining a fair distribution of marital property.
If you own a chiropractic practice, begin organizing its records early.
Relevant documents may include:
Do not hide income, transfer patients, delay payments, create unnecessary expenses, or manipulate the practice’s finances. Those actions can damage your credibility and make the divorce more expensive.
If you are the non-owner spouse, do not assume that you have no interest in the practice simply because you are not a chiropractor or your name is not on the business.
Dividing a chiropractic practice in a New Jersey divorce requires more than choosing a percentage.
The practice must be properly identified, valued, and considered alongside the rest of the marital estate. Income, goodwill, liabilities, taxes, licensing restrictions, and the practical ability to fund a buyout may all affect the result.
A knowledgeable divorce attorney and qualified financial expert can help determine a defensible value and develop a settlement that protects your long-term interests.
I have focused my practice on New Jersey divorce law for 38 years and have represented business owners, professionals, and their spouses in financially complex cases.
I get it, and I am here to help.
My free Divorce Smarter Course explains property division, support, custody, and divorce strategy in plain English.
Until next time,
Steve