Business Ownership and Marital Property

Business Ownership and Marital Property in Property Divison

Even if you do not know the details of Illinois’ statute on the distribution of assets, you probably have a general understanding of the basics regarding property in divorce. All items acquired during the marriage are considered marital assets, and the law mandates that they be equitably distributed between the parties. Though it may not lead to an equal 50-50 split, the process of dividing property seems relatively straightforward: Establish the value of items like real estate, vehicles, and bank accounts, and divide them up according to the interests of fairness.

However, property division becomes markedly more complicated when an Illinois divorce involves ownership of a business. Even classifying this type of asset as marital or separate can be a challenge, since the lines can be blurred by business and personal decisions made that have unintended results. You can trust a Chicago divorce lawyer to protect your personal and professional interests, but an overview of categorizing and valuing businesses, and marital propertyHow Illinois Property Division Laws Work

The Illinois statute on property division applies to all marital assets, including ownership interest in a business. Two important factors to consider are:

• Whether the parties acquired an asset before or after getting married; and
• Who should receive the property and/or how its value should be distributed between the parties, after taking into account how other property is divided through the divorce process.

You should note that the statute only dictates property division if the issue is before the court for a decision. Illinois law encourages parties to agree on various aspects of the divorce process, including whether an asset is marital AND who receives it. If you can compromise, you sidestep the rigid requirements of the statute on equitable division.

Considerations Regarding Business Ownership in Divorce

Based upon the above summary, you can guess the challenges that arise in connection with asset division and businesses. We can provide details regarding the following points:

• In some cases, interests in a business (or portions thereof) may be marital property even if one spouse founded the company before marriage. Examples may include where the business owner acquires additional interests after marriage, or where the business owner diverts his compensation back into the company rather than being paid.
• Parties generally have three options regarding the division of business shares: One spouse buys out the other, both sell to a third party, or they continue to operate the company after divorce.
• If a business valuation will be necessary.
• In establishing the company’s value, you should understand the role of goodwill. When customer relationships and reputation are primarily associated with one spouse, the future of the business relies upon that person remaining a figurehead.

A Chicago Divorce Lawyer Can Advise You on Business Shares and Marital Property

If you are contemplating divorce and want to know more about how the laws apply to ownership interests in a business, please contact Michael C. Craven, Chicago divorce attorney, and CPA. You can set up a consultation at our Chicago, IL office by calling (312) 621-5234 or visiting our website. Once we review your circumstances, we can explain the relevant legal concepts and assist with divorce proceedings.