Three Questions to Ask If You Own a Small Business and Plan to Divorce

 Posted on December 07,2021 in Property Division

The division of property and liabilities is often a complicated and contentious aspect of the divorce process. When spouses own a small business, the issue of property distribution is even more complex. If you or your spouse own a business or you jointly own a family business, you may be unsure of how to handle the business during the divorce. There is no one-size-fits-all solution to business owner concerns during divorce. The way you handle ownership of the business will depend on your specific needs, financial resources, and long-term goals. When deciding how to proceed, consider the following questions.

Who Has Ownership Rights to the Business?

Per Illinois law, marital property is property accumulated during the marriage. However, determining the identity of your business as marital or non-marital is not as straightforward as you may think. If a spouse owns the business before getting married, it is usually considered non-marital property. However, if the other spouse contributed time or resources to the betterment of the business, the business may be considered partially or fully marital.

How Much is the Business Worth?

Whether you decide to do with the business, you will need to know the business’s value. There are several ways to value a small business, but many people use the business’s fair market value to inform the property division process. This is the price a buyer would pay for the business. It is recommended that business owners have their business professionally valued in a divorce. You and your spouse may choose to use the same business appraiser or separate appraisers depending on your particular situation.

Should I Keep or Sell the Business?

The biggest question during divorce involving business owners is what to do with the business. If it is a family business, you and your soon-to-be-ex may decide to continue running the business jointly even after the divorce. You may be able to restructure the business and split operations between you and your spouse. However, this solution is often impractical for many divorcing couples.

You may also decide to sell the business and divide the proceeds equitably between you and your spouse or pay off jointly held debts. If one spouse wishes to retain the business, he or she may “buy out” the other spouse by giving up ownership of other assets.

Contact a Chicago Divorce Lawyer

If you are getting divorced and you or your spouse own a business, contact a Cook County divorce attorney from The Law Office of George J. Skuros for help. Call us at 312-884-1222 today for a fee consultation.

Source:

https://www.ilga.gov/legislation/ilcs/documents/075000050k503.htm