Tag Archives: family business and divorce

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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Illinois divorce attorney, Illinois divorce lawsBefore Rebecca Saltiel Busch launched her health care consulting business a quarter century ago, she sought out the CEOs of 10 various failed business in hope of learning from their mistakes. What she found was that the contributing factor to the demise of these businesses was divorce.

Forewarned, Busch outlined a shareholder agreement that she states saved her thousands of dollars when she divorced and one that placed the interests of the business above the individual shareholder’s interests. The agreement secured her company’s survival and today it still remains solvent.

Busch also detailed a six-step guide to business survival in the face of divorce that may keep other divorcing couples out of bankruptcy 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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