What Happens to a Family Business in an Illinois Divorce?

 Posted on July 12,2024 in Property Division

When two people get divorced in Illinois, they are both entitled to marital property. Marital property is what Illinois law calls possessions or assets that either spouse acquired during the marriage. With some exceptions, these assets belong to both parties and are divided in a divorce. The couple can divide the property between themselves or a court can do it for them.

When an Illinois court divides marital property between two spouses, it does so fairly, not equally. This can make the process somewhat complex because instead of just dividing everything in half, it is up to the judge to decide how the property should be divided. Property division becomes even more complex when it involves assets that are hard to divide, such as a family business. An Illinois property division attorney will defend your interests throughout the process and make sure you receive your fair share.

Is a Family Business Divided in a Divorce?

A family business is usually divided in a divorce. Even if it was started by one spouse before the marriage, the other spouse may be entitled to part of it if:

• He or she contributed to the business by carrying out functions within the company.

• He or she contributed to the business by taking care of the children and day-to-day duties in the home, which allowed the other spouse to grow the company.

• He or she used personal property as collateral for the business.

In cases like these, both spouses will likely be entitled to some share of the business. How it is distributed, however, is based on whatever the judge deems fair. The first step is to value the business.

How Is a Business Valued?

There are three main ways to appraise a business in a divorce:

• Income approach: The business is valued based on its revenue and expenses. A forensic accountant or valuator will review the company’s profit and loss balance sheets along with other documentation. The appraiser will then set a dollar value for the business based on its projected income. This is the most common method of valuation.

• Market approach: The business is valued based on how much similar businesses have sold for recently. This is similar to how real estate is valued and is more commonly used for businesses that have franchises or are likely to be sold in the near future.

• Asset approach: The business is valued based on its assets, such as real estate, office equipment, intellectual property, and more.

How Is a Business Divided?

There are three ways a business is usually divided:

• The spouses continue to co-own the business with clearly defined responsibilities and ownership.

• The business is sold and each spouse receives a share of the sale.

• One spouse keeps the business and the judge awards the other spouse assets equal in value to his or her share of the business.

Contact a Wheaton, IL Property Division Lawyer

At Davi Law Group, our attorneys are highly skilled in property division. We are experienced in achieving the best possible outcome for our clients and are eager to protect your interests. Call 630-657-5052 to schedule a free consultation with a DuPage County, IL property division attorney today.