The Wall Street Journal reports that just under one-third of the physicians in the United States are women and, at 34-percent, Minnesota’s numbers are only slightly higher.
As more women become physicians, we are seeing more couples divorce where both people are doctors. Whether or not they are working together, there are special issues that have to be addressed in a divorce when the spouses each practice medicine. Prime among them is the frequent disparity between the incomes of husband and wife doctors.
Harvard economists Claudia Goldin and Lawrence Katz studied the earnings gap. They reported that in 2007 – the most recent year data is available – the median income of female physicians was $112,128, compared with $186,916 for males. While the dollars earned no doubt rose for both sexes in the past decade, there is no evidence that the gender disparity has narrowed significantly.
This comes into play when doctors divorce each other.
“My spouse has a successful practice,” an angry physician once shouted at a colleague. “I don’t understand why I have to pay any alimony.”
Using the median incomes reported in the Harvard study just as an example, the reasons for support payments are both simple and complex.
At a simple level, the couple enjoyed a household income of nearly $300,000 during the last full year they were married. Once they legally separate, the wife will find what she has to live on cut by almost two-thirds. Even with child support, she will probably see a dramatic reduction in her standard of living. In Minnesota, divorce laws are designed to ease the transition to life as a single income household when one spouse earns significantly less than the other.
Given the earning potential of the wife in our example, the length of time alimony is paid can be limited – and end if she remarries – in negotiating the final settlement. The higher-earning husband won’t be expected to subsidize her lifestyle forever. For a court to accept a settlement it must treat both spouses fairly.
But on a more complex level, when both spouses have an active practice, dividing marital assets equitably can become a thorny stumbling block.
Making a fair asset division can become complicated when equalizing the value of the couple’s respective practices.
We always bring in a qualified, neutral appraiser to determine how much each practice is worth; until that is done, as your attorneys we it’s very difficult to recommend how to split all of the other marital assets and obligations. Our goal is to ensure that you and your spouse end up with as close to a 50-50 division as possible. But some couples have difficulty resolving the issue of the value of each other’s practice.
For example, if one spouse only saw patients four days a week and spent the fifth with the children while the other was working six days, we have seen protracted arguments over the value of caregiving as opposed to practicing. This makes calculating the present and future value of the two practices extremely difficult, and then agreeing on an equitable split of all of the marital assets.
We’ve also seen heated disagreement when one spouse was a highly specialized surgeon who only operated three times a week because each procedure took 12-to-15 hours, and the other was a general practitioner seeing a parade of patients all day long. Yes, a dollar value can be placed on each practice. But how should they account for the actual nature and size of their respective patient lists? It can be difficult to work out.
We remind clients who can’t agree on these often-thorny issues that the alternative is having a judge decide – never the best alternative.
Beyond their practices, if the couple only had separate bank accounts during the marriage, it can be easier to determine which spouse paid for what asset. As a practical matter, often there are both individual and joint accounts with money moved between them. So reconstructing which spouse bought a piece of art or paid the mortgage on the cabin is nearly impossible.
Anyway, with only a few exceptions the law tends to consider marital assets as jointly owned regardless of who wrote the check.
How marital assets are divided can be a complex and often complicated negotiating process when two physicians in private practice are divorcing. Our job as your attorneys is to represent you forcefully yet reasonably, and to help get you through the emotional trauma without adding to the disruption that’s already in your life.
Kathy Newman has more than 35 years of experience in high-asset divorce and family law issues faced by physicians throughout the Twin Cities area. Kathy and her team understand the applicable laws and legal nuances involved, and welcome the opportunity to support you through the process. Read more from our Divorce blog for physicians.