Deciding what to do with a family-owned business in a divorce can be challenging for divorcing couples in Illinois. Regardless of the size of the company, dealing with it in property division could be a contentious issue. Breaking the emotional tie and putting on the business hat might be the hardest part. Gathering all the business records and obtaining a current value of the business will likely be the place to start because a valuation will be necessary regardless of the way in which the division is handled.
Matters to consider will include whether the business was established before or after the wedding date. The spouse who owned the company before the marriage will likely be entitled to its value at the time of the marriage. However, growth that took place since then might be subject to division between the spouses. Furthermore, each spouse’s involvement, contribution and investment in the business will play a role.
Once all the relevant information is gathered and analyzed, the couple can either negotiate a settlement or leave it for the court to decide. The first option is to sell the company and divide the proceeds, but if one spouse wants to maintain ownership, installment payments could be arranged to buy out the other spouse’s share. Alternatively, the party who wants to keep the business can forfeit other assets in exchange for the business share of the other party. Of course, a prenuptial agreement signed before the marriage would take care of most of these issues.
While the options may seem uncomplicated, the process to reach an accurate evaluation, and determining each spouse’s rightful share can be complicated. For that reason, business owners in divorce typically each secure the services of an experienced divorce attorney who can provide support and guidance throughout the property division and all other divorce-related matters. Furthermore, an Illinois lawyer can assist during negotiations and review any agreements to confirm fairness.
Source: investopedia.com, “4 Ways to Reduce the Impact of Divorce on a Small Business“, Shawn Leamon, Accessed on March 9, 2018