Distributing assets in a divorce can be challenging enough, but going through a divorce as a business owner can be even more challenging. Divorce for business owners in Arlington Heights requires the expertise and experience of a divorce attorney who understands the complexities and nuances of business ownership in a divorce.
When someone is a business owner or has shares in a professional practice, his or her percentage of the business must be included in the valuation for the property distribution. Since the business provided the couple with either a portion or all of their income, it is part of the marital estate, and therefore is subject to distribution. Illinois follows the theory of equitable distribution, which is not the same as a community property state.
In Illinois, the Illinois Marriage and Dissolution of Marriage Act states that marital assets will be divided in a fair and equitable manner. With a community property state, assets are essentially split 50/50 down the middle. With equitable distribution, the overall distribution is designed to be fair and equitable. This means one spouse may get a particular asset while the other receives another of equal value.
There are factors to consider that can impact how the business is divided. Did the other spouse work at the business? Was the business owned by one spouse before entering into the marriage? If so, did the other spouse do anything that added to its value during the course of the marriage? In theory, a business owned by one spouse prior to marriage might be a separate asset, unless the other spouse contributed in some way or funds were mixed together, which is known as commingling. Commingling assets can turn a separate asset into marital property.
Before placing a value on your business, it is important that you and your partner discuss future plans for the business. Sometimes, it may be easier to sell the business and split the profits. In other situations, this may not be the preferred method.
If one spouse wants to continue operating the business, he or she could negotiate a property settlement division that will allow him or her to retain the business in exchange for his or her spouse keeping a larger percentage of another marital asset. In a sense, it is almost like buying out your partner.
Placing a value on a business, even a small one, can require the use of an expert. Your Arlington Heights business divorce attorney can explain the different valuation options. The main methods include:
Working with the right divorce attorney is crucial when a business is part of the marital estate. Contact SAM LAW OFFICE LLC today to set up an initial consultation to discuss your Arlington Heights business owner divorce.