What Happens to a Shared Business in Illinois Divorce?

In the realm of marriage, the intertwining of personal and professional lives can become particularly evident, especially when it comes to shared businesses. According to the United States Census Bureau, 10% of American businesses are co-owned by spouses. This statistic underscores the importance of understanding how shared business interests can impact divorce settlements and the necessity for couples to navigate these waters carefully to secure a fair outcome. In this blog, we will look at different ways divorce can impact your shared business, helping you comprehend your rights and options during this pivotal transition.

Understanding Illinois Divorce Laws

Illinois follows the principle of equitable distribution when dividing marital property. This means that assets acquired during the marriage, including business interests, are divided fairly but not necessarily equally. It’s important to distinguish between marital and separate property, as this classification significantly impacts asset division. Marital property generally includes assets acquired or increased in value during the marriage, while separate property consists of assets owned before the marriage or acquired individually by gift or inheritance.

The Shared Business in Divorce

When a business is jointly owned and supported by both spouses, particularly through marital funds, it’s likely to be regarded as a marital asset under Illinois law. If the business has appreciated during the marriage, this further solidifies its classification as a shared asset that must be divided in the divorce proceedings.

The division of a business can take multiple forms:

• Assigning Ownership: One option is for one spouse to retain full ownership of the business, with the other compensated through other assets of equal value. This approach provides a clean break for both parties.

• Dividing Assets: In some cases, dividing the business assets themselves may be more equitable. This requires careful consideration of each spouse’s contributions and financial interests.

• Selling the Business: If neither party wishes to continue owning the business, selling it and splitting the proceeds might be best. This decision should be based on a realistic assessment of the business’s value and market conditions.

• Continuing Joint Operation: In certain situations, divorcing couples may continue jointly operating the business. While this requires high trust and cooperation, it can be a practical option if both parties can maintain a professional relationship.

Tips to Protect Your Business During Divorce

The prospect of losing a shared business can be daunting, especially for the spouse who has been heavily involved in its operations. To ensure that your business interests are safeguarded during the divorce proceedings, make sure to follow these tips:

• Get a Professional Valuation: Accurately determining the value of your business is essential for making informed decisions during the asset division process. Consider hiring an appraiser to conduct an independent valuation of your business.

• Maintain Detailed Records: Keeping records of all financial transactions related to the business can help establish its value and contributions made by each spouse.

• Communicate: If possible, try to have open and transparent communication with your spouse about the business during the divorce process. This can help avoid misunderstandings and facilitate a smoother negotiation process.

Let the Professionals Help You

Divorce is never an easy experience, particularly when it involves shared businesses. Understanding how Illinois law treats marital property division is crucial for protecting your business interests and reaching a fair outcome. By following these tips and seeking legal aid, you can navigate this challenging situation with confidence and clarity. Remember, divorce may be the end of your marriage, but it doesn’t have to be the end of your business.

At Arami Law, Inc., our experienced team understands the intricacies of Illinois divorce laws and stands ready to defend your interests. Don’t face this challenging transition alone—reach out to us today for a consultation.