Tag Archives: dividing a business

Hinsdale divorce attorneyOwning a small business comes with many perks when compared to working for someone else. You set the schedule, make the big decisions, and reap the majority of the rewards. There are obvious downsides as well—statistically high likelihood of failure, more working hours, extra stress, and no health insurance to name just a few that most people can come up with off the tops of their heads. Yet, few people truly understand the full complexity of small business ownership until they go through a divorce. If you own a small business, your spouse, who may have nothing to do with that business, may be able to claim partial ownership during a divorce. When you own a business together, things get even more complicated.

Businesses Can Be Marital Property

Illinois divides marital property through equitable division. Marital property is anything acquired during the course of the marriage, including income, bank accounts, stocks, 401(k) accounts, pensions, real property, automobiles, furniture, and virtually every other type of asset or debt. This includes businesses. Property owned by each party before marriage remains nonmarital property. However, if you or your spouse owned a business before marriage and the other spouse became a co-owner, or contributed to the business through labor, or contributed to it with funding, it too will be considered marital property even though it was owned by one party before the marriage began.

Dividing a Business Often Means One Spouse Becomes the Sole Owner

For spouses who started up a small business together during marriage, dividing that business without ruining it can be complicated and in many cases, neither spouse has a desire to continue operating the business with the other. As such, the best option may be to give sole ownership to one spouse while the other gets the house, for example. In the best-case scenario, one spouse will be inclined to a buyout. In more complicated cases, neither spouse wants to give up their ownership of the business, and additional compromises will eventually have to be made either through mediation or in a courtroom, ordered by a judge.

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DuPage County business asset divorce attorneyIf you are a business owner, your business is most likely one of the most expensive assets that you own. Deciding who gets to keep the house is one thing, but a business is a whole other creature that can be difficult to divide when you are getting divorce.

Your specific circumstances will determine how much of the business your ex is entitled to, but in some cases, he or she may be entitled to as much as half of the business. While a prenuptial agreement is the best way to ensure your business is protected in the event you divorce, not everyone gets one. Here are four ways you can protect your business during a divorce:

1. Get a Postnuptial Agreement

If you dropped the ball and did not have a prenuptial agreement in place when you got married, do not fret - you can still get a postnuptial agreement. Typically, a postnuptial agreement in Illinois has the same type of clauses and information about what would happen in the event of a divorce, you are just signing it after you are married, rather than before. But beware, if you try to enter into a postnuptial agreement after you have already made the decision to get divorced, your agreement may not be upheld in court.

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entrepreneurs and divorce, considering divorce, dividing a business, DuPage County divorce lawyer, family business and divorce, Illinois divorce attorney, Illinois family lawyer, professional valuations, value for your businessOne of the most challenging aspects of a divorce is determining what happens to your property. Such a determination is particularly challenging when it comes to a family business. A key aspect of this process is how the court will determine a value for your business.

Professional Valuations

Determining how much a business is worth is a very complex task. In most instances, the court will rely on experts, such as professional appraisers. The appraiser must be skilled at applying an appropriate valuation method based on relevant information about the business, such as financial statements and tax returns associated with the business. The most common valuation methods include:

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