In a divorce, jointly owned businesses are valued, and ownership or profits may be divided based on equitable distribution principles.
Understanding Business Division in Divorce
Dividing a jointly owned business can be one of the most complex aspects of a divorce. Illinois courts aim to divide marital property fairly, which may involve assigning ownership, dividing profits, or liquidating the business. The specific outcome depends on the business’s value, the contributions of each spouse, and the long-term viability of the business.
Legal Context for Business Division in Illinois
Under the Illinois Marriage and Dissolution of Marriage Act (750 ILCS 5), a business is considered marital property if it was started or acquired during the marriage. If the business predates the marriage, its appreciation in value during the marriage may still be subject to division.
Steps in the Business Division Process:
- Determine Whether the Business Is Marital Property:
Businesses owned before the marriage or inherited may be considered non-marital property unless commingled with marital assets. - Value the Business:
A professional valuation is conducted to determine the business’s fair market value. - Decide on Division:
Courts consider several options:- Buyout: One spouse buys out the other’s share.
- Co-ownership: Both spouses continue owning and operating the business.
- Sale: The business is sold, and the proceeds are divided.
- Consider Financial Contributions:
The court evaluates each spouse’s contributions to the business, such as financial investments, labor, or managerial responsibilities.
Example Scenario:
If one spouse started the business before the marriage but the other contributed significantly to its growth, the court might award a portion of the business’s value to the contributing spouse.
Steps to Address a Jointly Owned Business During Divorce
- Identify the Business’s Ownership and Contributions:
Gather records to show when the business was established and the role each spouse played in its success. - Hire a Valuation Expert:
Obtain a professional valuation to assess the business’s worth accurately. - Negotiate Division Options:
Discuss potential outcomes with your spouse, such as buyouts, co-ownership, or sale. - File Supporting Evidence in Court:
Present documentation of the business’s value and each spouse’s contributions. - Follow the Court’s Decision:
Comply with the court’s orders regarding ownership transfer, profit division, or liquidation.
How Attorneys Can Help
An experienced family law attorney can:
- Help determine whether the business is marital or non-marital property.
- Work with valuation experts to establish the business’s true value.
- Negotiate a fair division of ownership or profits.
- Advocate for your financial interests in court.
Need Help With Business Division During Divorce?
Call (630) 366-1760 to consult with a family law attorney. We’ll guide you through the process of dividing a jointly owned business and protecting your financial interests.
Disclaimer: This page provides general information and is not intended as legal advice. For personalized assistance, consult a licensed attorney.
