A business may be the only asset in your Illinois divorce worth more than your family home or your retirement account. The bigger and more successful your business is, the more likely it is to become a sticking point in your property division negotiations for a divorce.
Illinois law mandates the fair or equitable division of your property at the end of your marriage. However, you and your ex may have very different ideas of what is fair. You may feel strongly about keeping the business that you inherited from your family or built shortly after high school.
Can you protect your business as separate property?
Businesses run during marriages are often vulnerable
Some business owners negotiate marital agreements and can therefore protect their business from any property division claims when they divorce. However, many business owners do not have a marital agreement with their spouses and have to worry about the company they own when they divorce.
In theory, if you started the business before your marriage or inherited it, it could be separate property. However, most people will invest significant marital income in the maintenance of a business even if they already own the company prior to marriage. The need to spend marital income on the business and any contributions made by your spouse to the company muddy the water and make at least some of its value subject to division in your divorce proceedings.
Business valuation is an important step
If you hope to protect as much of your business as possible or to use other assets as bargaining chips against the ownership of the business itself, then you will absolutely need an accurate idea of what the company is worth.
Proper business valuation doesn’t just look at the overall value of company assets but also at the impact of its obligations and its potential for future revenue. Establishing an accurate valuation for your business and determining what portion of the company is marital and what portion of it is your separate property will play a key role in your divorce proceedings.
The exact steps you take to protect your interest in the company will vary based on the value of the business and the other assets you own. Advance planning will be crucial for business owners hoping to protect their companies when they file for divorce in Illinois.