Someone who starts or inherits a business will usually want to see that company grow. It will often be necessary to reinvest the income derived from running a successful business into the company if someone wants to maximize the profitability of the organization.
Married business owners often feel an additional degree of pressure regarding company performance, as the organization’s revenue might have a direct relationship to the comfort of their family members and overall household standard of living. Naturally, those who depend on the business to support themselves will want to protect the company to the best of their ability when contemplating divorce.
What many business owners fail to understand is that reinvesting in the company during a marriage might make it more vulnerable during divorce proceedings.
Commingling can endanger separate property
Someone who already owned a business before they got married or who inherited the company will probably expect that the organization will remain their sole property when they divorce. Assets owned prior to marriage and inherited resources are often separate property that play no role in asset division proceedings in an Illinois divorce.
However, the issue is not a black-and-white one but rather a matter with numerous skills of gray involved. Frequently, maintaining a successful company requires making a financial investment in it, and the use of marital income or assets to support a business could very well make the business at least partially marital property. Someone may have commingled separate and marital assets by using marital income to support the company.
Similarly, the efforts of the non-owner spouse to develop the company could also give them an interest in the organization. Unpaid work or contributions toward the business made using their income could give them a reason to claim that at least part of the company’s value is marital property that the spouses will share during divorce proceedings.
Litigated divorces have unpredictable outcomes
Although every family law judge will need to interpret the same laws and consider the same legal precedent as any other judge in the state, much of what determines the outcome in a family law case depends on a judge’s perspective. Therefore, those hoping to ensure a particular outcome in a divorce, such as protecting a business from division, will often find that an uncontested divorce is the best option.
If they can reach an agreement with their spouse on major marital issues, they will be able to retain control over the outcome of property division and other key decisions. Negotiating an uncontested divorce settlement is often a top priority for those with a business at risk due to commingling claims during a divorce.