How Are Small Businesses Divided in an Illinois Divorce? 

 Posted on October 13, 2021 in Family Law

Small businesses owners in Illinois face enormous challenges when trying to make their business successful. Many years and countless hours spent finding clients, fixing problems, and doing paperwork are no guarantee of achieving wealth or ease. The prospect of divorce can threaten everything an entrepreneur has created, including his or her long-term financial stability. 

The process of valuing and dividing a business in divorce also poses unique challenges. Determining which valuation method to use, how to split the business or buy out a spouse, and what to do with a business after these changes occur often require help from a skilled Illinois divorce attorney. 

How Will Divorce Affect My Business? 

Small businesses must be addressed during the marital asset division process in a divorce. This begins by determining whether a business is marital property and is therefore subject to division. If the business began after the marriage began, then assume the business is marital property. If the business existed before the marriage and was not protected by something like a prenuptial agreement, then any income, growth, and assets acquired by the business during the marriage could also be viewed as marital property. This is especially true if the business owner’s spouse was involved in working for the business or otherwise influencing its growth. 

If some or all of a business is determined to be marital property, then it will become part of the broader negotiations over asset division. Businesses must be valued so spouses can make informed decisions during the negotiation process. There are several business valuation methods, and an experienced financial professional can help determine which method is appropriate. 

Once a business’s value is determined, it must be divided. Business owners who are serious about retaining full control over their business and who have the financial means to do so, may be able to “buy out” their spouse’s ownership of the business. This can be done by giving up ownership of other marital assets, taking out a loan, or by liquidating some portion of the business and compensating the spouse in a lump sum. 

Speak with a Hinsdale, IL Divorce Lawyer

The prospect of dividing a business you have worked long and hard for can be daunting, but an experienced DuPage County divorce attorney at Law Office of Martoccio & Martoccio can help you work towards a favorable outcome. We have experience with divorces involving many kinds of complex assets and will help you build a comprehensive divorce team that includes asset-valuation specialists. Call us today and schedule your free initial consultation at 630-920-8855. 

Source:

https://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=075000050HPt%2E+V&ActID=2086&ChapterID=59&SeqStart=6200000&SeqEnd=8675000