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What Happens to the Family Business in an Illinois Divorce?

Posted on in Illinois Divorce

St. Charles family law attorneysThere is no denying that a divorce can be a complicated process. The legal dissolution of a marriage is not simply signing a piece of paper. Decisions about important issues need to be made, including how a couple’s assets and property will be divided. In some situations, spouses may have complex or high net-worth assets, including a family business. It can be difficult to determine how to handle the company’s ownership after the divorce, especially if both spouses are active in running the day-to-day operations. There are several options when it comes to dividing this intangible asset. Regardless, it is important to hire a knowledgeable divorce attorney to help protect your rights. 

The Equitable Distribution of a Company

According to Illinois law, marital property is subject to equitable distribution. This means that any assets or property acquired during the marriage will be divided fairly but not necessarily equally in half, or 50/50. Some couples may create a prenuptial agreement to decide ahead of time how to disperse marital assets in case they get divorced. Some couples may choose to sell the business, continue to jointly own it, or buy out their share.

When considering what happens to a business, if one spouse started a company before he or she got married, the business may be considered non-marital or separate property. In other cases, one or both spouses may have opened a store or launched a business together after they took their vows. In these instances, the business would likely be classified as marital property. 

There are also situations in which a business was started prior to the marriage but the company increased in value due to the efforts of one or both spouses during the marriage. In such cases, the value of the company added during the marriage would likely be considered marital.   

The Importance of a Business Valuation

When dividing marital assets, courts have authority to assign a value to the asset and determine how to divide that value among the parties if they cannot come to an arrangement on their own. Therefore, it is critical to assign an accurate value to each marital asset. A business valuation can be performed, which should include the following information:

  • What the company is worth at the time of the divorce
  • Projected future earnings of the business 
  • Business inventory considerations
  • Each spouse’s financial interest in the company
  • Amount of debt (if any) the company has

Once a valuation is complete, both spouses will know how much the company is worth and what they are entitled to based on his or her respective share if it were to be sold. Otherwise, one spouse can pay the other spouse his or her portion as a “buyout.”

Contact a Kane County Divorce Attorney

The division process during divorce can be tumultuous, especially if there are complex assets involved, such as family-run companies. The experienced law firm of Weiler & Lengle P.C. carefully assess all marital property and identify your goals during settlement negotiations. Our qualified and compassionate St. Charles asset division lawyers will provide skilled legal representation so you can obtain your fair share of the marital estate, including your interest in the family business. Call our office today at 630-382-8050 to schedule a confidential consultation.

 

Sources:

http://www.ilga.gov/legislation/ilcs/ilcs5.asp?ActID=2086&ChapterID=59

http://www.ilga.gov/legislation/ilcs/ilcs4.asp?ActID=2086&ChapterID=59&SeqStart=6000000&SeqEnd=8300000

http://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=075000050HPt%2E+V&ActID=2086&ChapterID=59&SeqStart=6100000&SeqEnd=8350000

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