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Kane County Divorce Lawyers For Protecting Businesses

Kane County Business Preservation Divorce Lawyers

Divorce Attorneys Explain How to Protect Small Business Ownership Interests in St. Charles and Geneva

Building a successful business demands a heavy investment of time, money, and energy. Through creative thinking and hard work, you may have developed intellectual property of great value such as innovative product designs and marketing concepts. You may have acquired expensive machinery, real estate, or other assets for the operation and growth of your business. You may have worked hard and marketed yourself to build a professional practice in medicine, accounting, or another field, perhaps in partnership with others.

Yet after all your hard work, if you are now facing a divorce, you may find yourself in a desperate fight for control of your business or even at risk of losing it all.

At Weiler & Lengle P.C., we understand how important it is to you to protect your business. We also know from experience that a quick and fair division of assets is very difficult when a significant portion of the family's assets are tied up in a business. You can rely on us to help you through this process because we have handled hundreds of divorces for business owners and their spouses.

When we take your case, we fully commit to protecting your interests and achieving your goals in relation to the business. Applying our in-depth knowledge of both Illinois divorce law and business financials, we will first obtain a proper valuation of your business. Once we have a clear understanding of your financial situation, we will design a customized divorce settlement to meet your unique needs.

6 Ways to Protect Your Kane County Business from Divorce

Whether you own 100 percent of your business, share it with family members, or are one of several stakeholders in a corporation, the basic strategies to protect a business from divorce are the same.

  1. Document the source of funds invested in the business. The more proof we have that non-marital funds were used to fund the business, the better the case we can make that your interest in the business is a non-marital asset.
  2. Do not commingle business and personal assets. If you owned the business prior to your marriage, or you built it with non-marital funds during your marriage, make sure you keep all of the business financials separate from your personal financials. For example, do not take out a home equity loan on your family residence to fund the business. Do not use marital funds to help repay business loans or buy things for the business. If you do use marital assets for the benefit of a non-marital business, you can be required to reimburse your spouse in the divorce settlement by giving them an equivalent extra share of other marital assets, per Illinois law 750 ILCS 5/503(a)(6.5-7).
  3. Pay yourself a competitive salary. Your earned income during the marriage-that is, income attributable to your personal effort-is considered marital property under Illinois law 750 ILCS 5/503(a)(8). If you invest all of the profits of the business back into the business or take only a low salary, your spouse could later claim that those earnings were marital property. Illinois law would then require reimbursement as explained above.
  4. Create a premarital or postnuptial agreement. You and your spouse can agree at any time to sign an agreement regarding ownership of the business, thus preventing future disputes.
  5. Structure the business as a corporation with protective provisions. When you create the legal agreements for a limited liability corporation (LLC) or another type of corporation, you can include provisions that will protect all stakeholders in the event of anyone's divorce. Examples of such provisions include requiring each partner's spouse to waive their right to any interest in the business, forbidding the transfer of shares without approval from the other shareholders, and giving other shareholders the right to buy out the interest of divorcing parties.
  6. Negotiate a structured buy-out. If you cannot afford to buy out your spouse's interest in a marital-property business with a lump sum at the time of your divorce, you may negotiate a plan to make payments over time. To avoid tax consequences, be sure your marital settlement agreement makes it clear that these payments are part of the division of property and not maintenance payments.

Advice for Spouses of Business Owners in Geneva

If your spouse has owned and operated a business during your marriage, you may not know the financial details of that business or understand your rights to a share of its value. Even if the assets are held in your spouse's name and you have not worked in the business, the business may still qualify as a marital asset and you may be entitled to a share of it.

Looking at it from another angle, if you need maintenance payments or child support from your spouse, it may be in your best interest to negotiate a division of property that helps your spouse keep the business going as a stable source of income, to everyone's benefit.

St. Charles Lawyers to Protect Your Business Interests in Divorce

If your divorce involves a family business, the attorneys of Weiler & Lengle P.C. have the right combination of legal, financial, and business acumen to help. Contact us in our St. Charles office at 630-382-8050 for an initial consultation. We serve clients in Kane County including the communities of Batavia, Elgin, Geneva, Pingree Grove, and St. Charles.

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