Will I Lose My Business in an Illinois Divorce?

 Posted on November 27, 2024 in Divorce

In Illinois, couples who get divorced are entitled to marital property. As a general rule, assets that were acquired during the marriage by either spouse are considered marital property and belong to both parties. There are some exceptions to this, like inheritances or gifts that were given to one spouse exclusively. For the most part, however, both spouses are entitled to a share of marital assets and it is up to the court how to divide them. 

This leads many business owners who are facing divorce to wonder what will happen to their business once the marriage is dissolved. Every divorce case is different, however, so there is not one uniform answer. For more information, consult an Illinois divorce attorney who will explain whether your business is considered marital property and how it can be divided in a divorce.

Is My Spouse Entitled to a Share of My Business?

Generally, a business that you launched during the marriage would be considered a marital asset, meaning that your spouse is entitled to a share of it. However, even if you started the business before the marriage, it may still be seen as marital property. Illinois law gives courts wide leeway to decide how to divide assets, and a judge may decide that a company launched before the marriage should be divided among both spouses. This can happen if the non-owner spouse contributed to the business in some way, like if he or she cared for the children which freed up the other spouse to focus on the business.

How Is a Business Valued in a Divorce?

The first step to dividing a business in a divorce is to determine its value. There are three main approaches to business valuations in a divorce:

• Market approach: Like real estate appraisal, the market approach involves evaluating the business by looking at similar businesses that have recently sold. The price those companies sold for helps determine the market value.

• Income approach: Valuators will look at the company’s revenue and analyze its financials to determine how much it is worth.

• Asset approach: This involves evaluating the company’s assets, which may include any real estate, intellectual property, office equipment, and more.

Based on your specific business, financial appraisers will determine which approach is best to determine its value.

How Are Businesses Divided in Divorce?

Illinois is an equitable division state, meaning that marital property is divided fairly rather than equally. Courts determine what is fair, and judges may use a number of techniques to distribute assets. A business, for example, may be divided in any of the following ways:

• The company is sold and the proceeds are distributed between the parties.

• The company continues to operate as before and dividends are paid to the other spouse.

• The other spouse is awarded shares in the company.

• The other spouse is awarded part ownership of the business.

• The business owner retains full ownership of the company and the other spouse is compensated with another asset, such as the family home or car. 

Contact a Will County, IL Divorce Lawyer

Property division is a complicated part of divorce, and the division of a business can be particularly complex. At Reeder & Brown, P.C., we fight aggressively to protect our clients’ interests and we will develop a personalized legal strategy to help you retain as much property as possible throughout your divorce. Call 815-885-5980 now to get a free consultation with a Plainfield, IL family law attorney today.