Sometimes, a divorce does more than break up a family. If either spouse is a business owner, a divorce can dramatically impact the day-to-day operations, or even the future viability, of the business.
When one or both of the spouses owns a business, deciding how the business should be handled depends on several different factors. The law requires a judge to decide if the business is personal or marital property. If the business is in whole, or even in part, marital property, the judge will have to decide an equitable way to split up the ownership.
Is the Business Personal or Marital Property?
Illinois law requires that marital property be split equitably between divorcing parties. Before any property division can be ordered, the parties must either agree as to what is marital property and what the parties own personally outside of the marriage, or the court has to make a ruling about which assets are marital property.
With a business the court will look at factors such as:
- Who owned the business prior to the marriage?
- Have the business’s profits been commingled?
- How much does each spouse work in the business?
- How much has each spouse invested in the business?
- Is there an ownership agreement, prenuptial, or postnuptial agreement?
If the business is found to be personal property belonging to one spouse, the court will not make any ruling on splitting the business. However, the value of the business may impact decisions about spousal support, child support, and the division of the marital property.
Options for the Business
If a business is found to be marital property, the court will need to know the value of the business. This value will then be considered with the value of all the other property and the judge will split the property in a way that is equitable under the circumstances. This does not mean that the property will be split equally.
If the court finds that the business is marital property, then the spouses have several options on how to proceed:
- Agree to share ownership;
- Decide one spouse will maintain sole ownership and pay off the other spouse;
- Go to mediation;
- Sell the business and split the money; or
- Make arguments to the court and let the judge decide.
Because businesses need stability and can be difficult to value, it is essential that you have a team advising you on the best way to proceed in a divorce case.
If your divorce involves a business or complicated assets, you need answers from someone experienced—not just experienced in family law, but also in handling complex asset cases. If you are considering or are involved in a divorce or legal separation, you need advice from a knowledgeable and seasoned DuPage County family law attorney. Call Sullivan Taylor, Gumina & Palmer, P.C. today at 630-665-7676 to schedule your consultation today.