In Illinois, a business that is considered marital property could be up for grabs in a divorce. According to Crain’s Chicago Business, divorce could lead to bankruptcy for a company, especially if a spouse is involved in the management or operations. Even if your spouse is not involved, your portion of the business may be at risk, which puts the whole company on shaky ground.
Without any sort of agreement specifying what will happen with the business in the event of a divorce, you may have to fight it out in court. To avoid that, one of the best alternatives you may choose to prevent issues is a solid buy-sell agreement that addresses divorce situations. In this agreement, you can spell out the details of what would happen if a partner or shareholder faces divorce.
Like a buy-sell agreement, a solid prenuptial agreement will also typically protect your business. However, it is not always possible to draw one up if you did not have the business until after you were married. If you never considered the ramifications of divorce, you may not have realized the need for a prenuptial agreement.
There are some other options you may be in a position to try in order to save the business and prevent issues. For example, you may be able to offer stock options, or if you and your spouse can get along, the two of you may draft a new agreement that allows you both to continue operating the business together. This information about ways to preserve a business in divorce is general in nature, so it should not be interpreted as legal advice.