What Issues Do Business Owners Need to Address When Getting Divorced?

 Posted on February 24, 2021 in Division of Assets

Owning your own business can be a rewarding career choice. However, being a business owner can significantly complicate the division of assets during divorce. If you or your spouse own a business, and you want to end your marriage, it is essential that you understand how business ownership is dealt with in an Illinois divorce. An attorney experienced in handling complex divorce cases can provide personalized guidance about your rights and responsibilities regarding business ownership.

Is the Business Considered Marital Property or Non-Marital Property?

When a couple marries, their property and debt usually becomes intermixed. Determining which assets and liabilities belong to the marital estate and which are owned by an individual spouse is often quite complicated. As a general rule, property, including businesses, acquired before the marriage are classified as non-marital property. The spouse who originally owned the asset retains the rights to that asset during divorce. Both spouses have a right to property obtained during the marriage. A non-marital business can become marital property if marital funds were used to finance the business. A business can also become part of the marital estate if the non-owner spouse contributed to the business’s growth or success.

It is important to note that the rules determining property classification during divorce can be overridden by a valid prenuptial agreement. If you designated your business as non-marital property in your prenup or other marital agreement, this designation will likely be upheld during your divorce. The main exception to this occurs when a marital agreement contains mistakes or oversights that make the document invalid.

How Much Is the Business Worth?

Whether your business is considered marital or non-marital property, you will need to determine the business’s value. An attorney who is experienced in business valuation can be a tremendous resource during your divorce. Once you know how much your business is worth, you will need to decide what to do with it. Some divorcing spouses find that it is easier to sell their business and divide the proceeds during divorce. You may also decide to buy out the other spouse by “purchasing” their share of the business. This is often accomplished by assigning the spouse other marital property of equal value. For example, you may keep the business, while your spouse will keep the marital home. The third option is to retain co-ownership of the business after divorce and continue running it together.

Contact a Naperville Business Owner Divorce Lawyer

If you or your spouse own a business, and you plan to get a divorce, speak with a DuPage County divorce attorney from the Pesce Law Group, P.C. We can help you determine the value of your business and assist in dividing your marital assets in a way that will allow you to continue owning and operating your business in the years to come. Call us at 630-352-2240 for a free consultation today.

Sources:

https://www.americanbar.org/groups/real_property_trust_estate/publications/probate-property-magazine/2019/march-april/three-options-a-private-business-a-divorce/