When Tennessee Doctors Divorce: Medical Practices Divided
When Tennessee Doctors Divorce: Medical Practices Divided
In Tennessee divorce and property division law, medical practices can be divided as marital property.
Large sums of money are typically at issue when a couple files for divorce and one of the parties owns a medical practice. In Tennessee, a doctor’s medical practice qualifies as marital property, which makes the value of the practice subject to division between the divorcing parties. Whether the doctor must split the value of the medical practice with the opposing spouse is a fact-sensitive issue and depends on a number of factors including the opposing spouse’s contribution to the practice, the length of the marriage, and the valuation of the practice. This article considers three Tennessee cases that address some of the dramatic issues surrounding the divorce of doctors who own medical practices.
Doctor Batson owned a practice specializing in internal medicine and met his wife later in life. Batson v. Batson, 769 S.W.2d 849 (Tenn. Ct. App. 1988). When the happy couple walked down the aisle, both the doctor and his new wife had already been married and divorced twice to other spouses. The parties each had children from earlier marriages, and the doctor insisted his blushing bride quit her job because taking care of the doctor would be a “full time job.” Less than two years after marriage, the doctor’s relationship with his wife’s children deteriorated and the two parties decided to move their children to separate houses. At around the same time, the doctor began having serious health issues, including alcoholism and heart problems. During their short, turbulent relationship, the couple separated on several occasions. Notably, the doctor briefly reconciled with his second wife while he was still married to his third. After only four years of marriage, the doctor filed for divorce, claiming his wife “ran off and left a sick man with a helpless little boy.”
The trial court held that two condominiums the couple shared, two cars, household furnishings, and a note payable (given by the wife to the doctor in exchange for purchasing one of the condominiums) were all marital property subject to division between the parties. The Tennessee Court of Appeals modified the trial court award and held that an increase in the value of the doctor’s pension plans, notes from the sale of property, certain rental property, and accounts receivable from the husband’s practice were also marital property subject to division between the parties. However, the Court of Appeals held that the note was separate property belonging to the doctor because it was given by the wife to the doctor in exchange for the purchase of a condominium. The accounts receivable of the doctor’s medical practice was held to be marital property, but the value of the practice remained the husband’s separate property. Because of the short and turbulent nature of the marriage and the disparity of wealth between the two parties before the marriage, the marital property was not divided equally. Rather, the Court of Appeals divided the property to restore each party to their pre-marriage financial condition.
Soon after marrying a nurse, Doctor Hazard opened a medical practice specializing in pulmonary medicine with an emphasis on critical care patients. Hazard v. Hazard 833 S.W.2d 911 (Tenn. Ct. App. 1992). About ten years later, the doctor and his wife filed for divorce. Under the wife’s account, she played an integral part in running the doctor’s medical practice. According to the doctor, the wife merely answered phones for a few months and occasionally helped with books. The wife claimed the doctor was insensitive to her emotional needs, was disinterested in participating in family activities, and spent an “inordinate” amount of time away from home. The wife also introduced proof that the doctor was engaging in an extramarital affair. The doctor attempted to prove that his wife was extremely demanding and uncooperative. He claimed that his wife made false accusations that he infected her with sexually transmitted diseases. The doctor also alleged that the wife engaged in an extramarital affair after the parties separated.
The trial court granted the wife divorce on the grounds of inappropriate marital conduct, finding that the wife’s actions did not affect the marital relationship as much as the doctor’s. The Tennessee Court of Appeals vacated part of the trial court holding and affirmed part of the trial court holding. In its opinion, the Court of Appeals drastically reduced the value of the husband’s medical practice for purposes of division between the parties. The Court of Appeals affirmed the trial court’s award to the wife of twenty percent of the interest from a tracheostomy kit designed by the doctor, who was also required to pay all of the wife’s attorney’s fees.
Doctor York met his wife while she was an undergraduate at Auburn, and the two married while she was still a coed. York v. York 1992 WL 181710 (Tenn. Ct. App. 1992). After the doctor graduated from medical school in Memphis, the couple moved to middle Tennessee, bore three children, and purchased a large antebellum home on almost one hundred acres of land near Franklin. Shortly after the move, the doctor expressed a desire that his wife obtain a job to defray the expenses of the costly renovation on the mansion. However, the wife was reluctant to do anything that would conflict with her “civic activities” and duties to the medical auxiliary. After twenty years of marriage and six years after moving into the antebellum mansion, the doctor began an affair with an assistant at his medical practice. He left the family mansion shortly thereafter, never to return.
The trial court ordered that the antebellum mansion be sold and the proceeds divided equally between the spouses. The court also included the doctor’s interest in his medical practice as part of the marital estate and gave the wife a lump sum of money to offset the value of the property the doctor received. The Tennessee Court of Appeals drastically reduced the trial court’s valuation of the doctor’s medical practice, affirmed an award of rehabilitative alimony for seventy-two months, and upheld that the doctor was required to pay his wife’s trial court fees.
As these cases clearly illustrate, wealth does not guarantee happiness. A wide array of marital problems can occur when large sums of money are involved. A doctor’s salary is earned through hard work and long hours, often to the detriment of the doctor’s family life. What a marriage to a doctor may lack in time and devotion is often compensated with money and property during a court’s division of a marital estate.
Read more about Memphis divorce attorney Miles Mason, Sr. JD, CPA. He practices family law exclusively with the Miles Mason Family Law Group, PLC in Memphis, Tennessee. He has taught seminars across the nation on divorce trial practice, professional practice valuation, and forensic accounting to judges, lawyers, CPAs, and business appraisal expert witnesses. Miles authored The Forensic Accounting Deskbook, published by the American Bar Association Family Law Section, which addressed many aspects of valuing and investigating businesses in divorce including professional practices. For more information, see When Professionals Divorce in Tennessee: Valuing Professional Practices.