Who Gets Our Small Business if We Get Divorced?

Lisle divorce and business ownership attorneyAnytime a business owner ends up going through a divorce, the value of their share of the business must be evaluated. The reason for this is that the business assets are likely a part of the marital estate and subject to equitable division under Illinois law. The division of such property becomes even more complicated if the other partner worked at the business or if one spouse owned the business prior to getting married.

Valuating a Business

Some businesses can be particularly hard to evaluate, especially if the business is young and has a lot of potential for growth. If marital funds were commingled with business funds, determining what assets belong to the business can also be difficult. To further complicate things, some business owners are concerned about what will happen to their business during the divorce, and this may lead them to attempt to hide assets.

Typically, there are three ways to determine the value of a small business:

  • The Market Approach – This is often best for couples that want to sell their business. In this method, the value of the business is determined by comparing it to other businesses that have sold recently.
  • The Asset Approach – When using this method, the value will be determined by considering the assets and debts of the business. Assets will often go beyond income and operating equipment and may include clout in the community.
  • The Income Approach – This method will use the current and projected future income earned by the business. It is often utilized by spouses that plan to continue to operate their business after the divorce is finalized.

What to Do With Your Business After Valuation

Once a business has had a value placed on it, the parties will have a better view of the assets that must be divided during divorce. Of course, the parties will not always agree on what they should be entitled to, and the court may have an entirely different idea than they do. In addition, parties may figure out that lengthy litigation will only endanger their business, which makes it imperative to work with an experienced attorney who can help negotiate a settlement that will protect the interests of everyone involved. Options may include, but are not limited to, the following:

  • Co-ownership of the business. However, this is not recommended for couples that are not able to work together.
  • Buying out the other spouse. This may deplete any liquid business assets, but it may allow for the retention of the business by one party.
  • Selling the business and splitting the proceeds. This method will dissolve the business but may provide both parties with liquid assets.

Contact a Lisle Divorce Lawyer

While you may have an idea of what you think is best for you and your business, an experienced attorney can help protect your rights and advocate for your interests throughout the legal process. Divorce is complicated, and as a small business owner, you have additional things to take into consideration. A divorce attorney who has experience in business law will be able to help you reach the outcome you need and deserve. Contact the skilled DuPage County business valuation attorneys at Momkus LLC by calling 630-434-0400 today to schedule a consultation.

Sources:

http://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=075000050HPt%2E+IV&ActID=2086&ChapterID=59&SeqStart=3800000&SeqEnd=5300000

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

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