In high-asset divorces, businesses are valued and may be divided equitably or offset with other assets to ensure a fair settlement.
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Understanding Business Division in High-Asset Divorces
When a business is part of the marital estate in a high-asset divorce, it must be valued and considered during property division. Illinois follows the principle of equitable distribution, meaning the division aims to be fair, though not necessarily equal.
Legal Context for Business Division
Under the Illinois Marriage and Dissolution of Marriage Act (750 ILCS 5/503), businesses owned or acquired during the marriage are typically considered marital property, subject to division.
Key Considerations for Dividing Businesses:
- Valuation: The business must be accurately valued, often requiring a professional appraisal.
- Ownership Stakes: The court will assess each spouse’s ownership interest and contributions.
- Marital vs. Non-Marital Portions: If the business was established before the marriage, only the marital portion (growth or contributions during the marriage) is subject to division.
Example Scenario:
A business worth $1 million, with $500,000 of its value accrued during the marriage, would have its marital portion ($500,000) included in the property division.
Steps to Divide a Business in a Divorce
- Hire a Valuation Expert
Engage a financial expert to assess the business’s value, including assets, liabilities, and future earnings potential. - Determine Marital and Non-Marital Portions
Separate the pre-marital value from the growth accrued during the marriage. - Negotiate Division Options
Common approaches include:- Buyout: One spouse buys out the other’s share.
- Asset Offset: The business remains with one spouse while the other receives equivalent assets (e.g., real estate, investments).
- Co-Ownership: Rarely, spouses may agree to continue jointly owning the business post-divorce.
- Address Tax Implications
Consider the tax impact of the division to avoid unexpected financial consequences. - Finalize in the Divorce Decree
Ensure the business division terms are clearly outlined in the final divorce agreement.
How Attorneys Can Help
An experienced attorney can:
- Coordinate with valuation experts to determine the business’s worth.
- Advocate for a fair division of the marital portion of the business.
- Negotiate favorable terms, whether through a buyout, offset, or co-ownership agreement.
- Address tax implications and ensure proper documentation in the divorce decree.
Need Help Dividing a Business in Divorce?
Call (630) 366-1760 to consult with a family law attorney experienced in high-asset divorces. We’ll protect your financial interests and help achieve a fair resolution.
Disclaimer: This page provides general information and is not intended as legal advice. For personalized assistance, consult a licensed attorney.
