For many couples going through a divorce, the thought of having to dissolve and sell one spouse’s business is a harrowing one. While the Illinois Marriage and Dissolution of Marriage Act mandates that everything is subject to equitable division, there are various factors that will make this division more complicated, such as ownership of a business prior to marriage.
Yet, while it is entirely possible that the business and/or a portion of its income can be viewed as matrimonial assets to be divided, there are ways to engage in forward thinking to protect your business before and while you are married, as we discuss below:
Shared Ownership with External Party/Parties
One of these options is to share ownership of your business with a third party outside of your marriage. A business that is co-owned by outside parties or shareholders is less likely to be at risk in the event of divorce, as courts will be more hesitant to dissolve and damage external shareholders’ interests.
Partnership or Shareholder Agreement
Even if you do co-own a business with your spouse, having a partnership or shareholders agreement in hand can help protect the interests of every party involved. These agreements can also contain clauses that help to prevent an ex-spouse from sharing confidential information in an attempt to compete.
You should also have a good insurance policy in place. A whole-life insurance policy can be liquidated to purchase a business outright from your spouse in order to prevent its dissolution.
You can also work to avoid intermingling personal and business assets during your marriage by keeping these separate and avoiding using marital funds to support the business; be careful, as this includes using the family home to borrow for the sake of the business.
Finally, perhaps the most important tool you have to protect your business interests before, during, and after your marriage is a prenuptial agreement. Prenuptial agreements can contract to anything that is legal, including provisions that state that your business belongs to you alone and remains with you in the event of divorce. This—or a postnuptial agreement, entered into during the marriage if you did not enter into a prenuptial agreement—is the best way to provide peace of mind when it comes to ensuring that you will hold onto your business.
Contact Our Experienced Illinois Divorce Attorneys
If you are a business owner concerned about protecting your business throughout your marriage, contact our experienced divorce and business attorneys today for a free consultation to find out how we can help.