Dividing the Practice: How Professional Businesses Are Handled in a New York Divorce

When a marriage ends and one or both spouses own a business or professional practice, the divorce process becomes more than just emotional, it becomes financially intricate. Whether you’re a physician with your own clinic, a partner in a growing law firm, or a business owner managing a closely held company, you should understand how New York courts handle business interests in a divorce.

Here’s what successful business owners and professionals, and their spouses, need to know when facing divorce involving a business or professional license:

What Makes a Business Marital Property?

If the business was started during the marriage, it is presumably considered marital property, even if only one spouse’s name is on it (there can be exceptions, depending on how the business was started). On the other hand, if the business was started before the marriage, then typically only the increase in value during the marriage may be subject to division and depends on contributions by the parties.

For example, if one spouse founded a dental practice before the marriage but significantly expanded its services and profitability during the marriage, with the help or support of the other spouse, the growth portion is likely part of the marital estate.

The Role of Professional Licenses and Degrees

Until recent changes in the law, professional licenses and degrees, like those in law or medicine, were considered marital assets if earned during the marriage. Their value was measured by estimating how much more income the professional could earn with that credential.

That approach has changed. Now, courts no longer treat a degree or license as something that can be divided. However, they still look closely at how much the other spouse contributed to helping the professional obtain or benefit from the credential.

For example, a spouse who worked nights to pay the mortgage while the other attended law school may be entitled to a larger share of other assets, even if they can’t claim a piece of the law degree itself.

Contributions by the Non-Owner Spouse Matter

Courts recognize both financial and non-financial contributions to a business or career, such as:

Funding tuition or business expenses
Running the household and caring for children
Helping set up the office or acting as an informal manager or assistant
Supporting business growth through networking or even unpaid labor

As a general example, a spouse who helped design the office, raised children full time, and scaled back his or her own career so the partner could grow a private practice, could be considered a strong factor in deciding the equitable distribution, which is how assets are divided.

What Happens When a Business Is Sold?

If the business is sold before or during the divorce, its value is easier to identify, and the proceeds can be split like any other marital asset. But, in most divorces, the business is ongoing, and courts won’t force a sale.

Instead, a valuation expert is brought in to determine the value of the business. The spouse who owns the business typically keeps it, and the other spouse receives his or her share through a buyout or an award of other assets through equitable distribution.

As an example, a cosmetic surgery practice could be valued at $20 million, and the court could determine that the non-owning spouse is entitled to up to half of the value of the business (NB: it is rare for a non-licensed spouse to receive half, but possible). In that situation, the spouse would not receive part of the practice, but instead would receive a portion of the $10 million valuation in other marital assets to offset their share.

Strategy: Best Arguments from Both Sides

For the business owner or licensed professional:

Emphasize the effort and risk involved in building the practice
Argue that the growth was due to personal drive, not shared resources or support
Present a conservative, accurate business valuation, and show how distributing too much of the value could destabilize the business or future income

For the supporting spouse:

Highlight the financial, emotional, and personal sacrifices made to support the business or career
Document any work done for the business, even if unpaid or informal
Seek valuation experts who capture not just current assets but future earning potential

Planning for Success in a High-Stakes Divorce

Divorces involving businesses and professional licenses demand skill, strategic foresight, and detailed financial analysis. They’re about more than numbers: they’re about preserving what you’ve built and ensuring a fair, sustainable resolution.

Whether you’re the professional or the supporting spouse, you need experienced litigators who understand both the legal and financial dimensions of these cases. At The Glennon Law Firm, we’re trusted by professionals, executives, and entrepreneurs across New York state for just that reason.

You may learn more about the nuances of divorce involving businesses or other assets by visiting these pages:

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To learn more about these topics, check out our Legalities & Realities® Podcast and other related blog posts:

This blog post is for informational purposes only and does not constitute legal advice. For specific legal counsel, please contact our office directly.