Key takeaways
Divorce can trigger disclosure of practice finances
GP partners may need to share partnership accounts and agreements during divorce proceedings.
Practice interests may be valued and divided
Courts can consider a GP’s share in the practice as part of the matrimonial assets.
Nuptial agreements offer valuable protection
Pre-or post-nuptial agreements can help ringfence practice interests and reduce future uncertainty.
What happens to a GP practice in the event of a divorce
As a Partner in a GP practice, it can be a particularly worrying time if you are getting divorced, or if one of your fellow partners is going through a divorce. There can be implications for the partnership, some of which are addressed below:
Financial disclosure
Within a divorce it is usual practice for there to be an exchange of financial disclosure. For a GP Partner this is likely to include copies of the annual Partnership accounts, the Partnership Agreement and tax returns. There may be queries raised in relation to remuneration arrangements within the practice or other financial matters, which the GP spouse would be required to answer. However, financial court proceedings arising from a divorce are private and therefore the documentation/information provided would only be viewed by the other spouse, legal representatives and the Court.
Valuation of the Practice
It may be necessary for there to be a valuation of the assets of the GP practice e.g. the property from which the practice operates, to ascertain the value of the GP spouse’s interest.
Orders a Court can make
The Court has a number of options in terms of the types of Order it can make. These include the following:
They can order one spouse should pay the other a specific sum of money (known as a lump sum)
They can order that assets should be transferred from joint names or one spouse’s sole name to the other
They can order that pension provision should be shared
They can order that monthly maintenance should be paid from one to the other
It is unlikely that a Court would make an Order that would leave the Practice unable to operate effectively. However, the financial effects on the GP spouse may cause them to make decisions about the Practice and their role within it, that they may not have made if it were not for the divorce.
Protective steps
It is always advisable for a GP to consider whether they want to enter into a Pre-Nuptial Agreement prior to marriage, or a Post-Nuptial Agreement if they are already married.
These nuptial agreements set out what would happen in the event of a couple getting divorce. They are not currently legally binding, as the Court has retained the ability to depart from them. However, they are a factor that must be considered by a Court on divorce and are ‘highly persuasive’. As a result, provided both parties had a full understanding of the implications of signing the agreement and the outcome is considered fair, the Court are very likely to hold a couple to the agreement.
A pre or post nuptial agreement can seek to ringfence the interest in a GP Practice, so that it doesn’t fall to be considered as a matrimonial asset during a divorce. This can provide a significant amount of reassurance to both the GP spouse and their follow partners.
