Dividing a Business in a Divorce

 Posted on November 24, 2015 in Division of Property

If you are a business owner, you will not necessarily lose your business in your divorce. But you will most likely be required to divide the business' interests with your spouse or buy out his or her interest in the company. What will happen to your small business in your divorce depends on a number of factors, including your future plans for the business and the extent to which both you and your spouse are invested in its daily operation. When you are going through a divorce, it is important that you work with an attorney who knows how to handle the division of a small business between divorcing spouses.

Businesses That Are Developed during a Marriage Are Marital Property

Just like your home and joint bank accounts, a business is considered to be a marital asset and thus subject to Illinois' laws of equitable distribution. If you built your business before entering your marriage, it is not necessarily protected from being divided between you and your spouse in your divorce. This is because your business likely comprised a significant portion of your income, possibly even all of it. Your spouse might also have helped it grow in some way after your marriage. The only exception to the equitable distribution rule is if you have a prenuptial agreement in place that states that your spouse is not entitled to any portion of your business in a divorce.

How Is a Business Divided?

How your business may be divided depends on a number of factors. Its market value, the portion of your household income it generates, how involved you and your spouse each are in its daily operation, and your plans for the business' future can all be considered during the property division process.

One way the court might divide your business is to allow you to fully retain the company and in return, give your spouse a greater share of your marital assets. In Illinois, a marital estate is not divided 50/50. This gives the court some leeway to give each spouse a portion of their property that best suits their needs. This is a popular option for couples where only one partner ran the business or was significantly more involved than his or her spouse.

Another option is to sell the business, giving you and your spouse both a share of the profit. For couples who worked at their businesses together and can not, or do not want to, continue to work together, this is often the best option. If your divorce is fairly amicable, you might want to continue to work together. If you take this route, work with the court to draft an ownership agreement for your shared ownership. Because you will be business partners, rather than spouses, you will need new legal protection for your business interests.

Kane County Divorce Attorneys

If you are a business owner going through a divorce, work with an experienced Kane County divorce attorney to ensure that your interests are represented and your rights are protected throughout the divorce process. The attorneys at Goostree Law Group can help you work through every step of the divorce process. Contact our firm today to begin working on your case with us.

Source:

http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2086&ChapterID=59