Illinois business owners may be wondering how their company will be divided in the event of a divorce. A few quick questions can help you figure out this answer. First, was the business established prior to or during the marriage? Second, if the business was established before the marriage, were any joint funds used for the company? Finally, did both spouses contribute significantly to the business?
Is the business marital property?
If your business was established during your marriage, it is considered marital property. However, if the business was owned by one spouse prior to the marriage, it could be considered separate property. This is where things can get sticky, though. If both spouses contributed to the business, financially or otherwise, it can be considered marital property regardless of who owned it initially.
Because Illinois is an equitable distribution state, dividing your business can cause additional issues. A divorce lawyer can help you navigate state laws regarding the separation of marital property during your divorce.
Fairly dividing your business
If you cannot reach an agreement with your spouse, the division will be decided by a judge following the state’s equitable distribution laws. This means that everything should be divided fairly, but this does not always mean equally.
If you and your spouse do not have a prenuptial agreement, or if you do but the issue was not adequately addressed, you can still enter into a post-marital agreement. Either can state how the business will be divided in the event of divorce. Additionally, if both parties agree, you can divide the business in the following ways:
- One spouse buys the other spouse out, possibly requiring a loan.
- Continue co-ownership of the business if the parties can maintain a professional relationship.
- Sell the business and divide the proceeds between the parties.
Protecting your assets
Emotions can run high during the stressful event of a divorce. When considering the division of your assets, especially that of your business, an experienced divorce attorney can be of great assistance.