What will happen to my business if I get a divorce?
Many Illinois couples run small businesses together. While most people do not go into business as a couple expecting to divorce, statistically speaking about half of all marriages do not last.
An Illinois divorce attorney knows that family businesses can easily fold following a divorce, however some are able to continue on. Entrepreneurs often put in long hours and many years of hard work in order to get their business off the ground.
When a marriage is on the rocks, some business owners wonder what could happen to the business. In Illinois, all marital assets are subject to property division. This may mean that business
owners could face the potential loss of a good portion of their business to an ex-spouse. Some protective measures can be completed before, during and after a divorce to ensure that a divorce does not undo all of the effort put in to creating a successful business.
Get the right documents in place
Anyone who plans to start up a business may want to consider signing a prenuptial agreement. An Illinois divorce attorney understands that a prenup must be in place prior to a marriage for it to be valid. For those business owners who are already married, a postnuptial agreement may be a similar
option.
Obtain a business valuation
In Illinois, all marital property must be assigned a monetary value before being divided. It is often beneficial to hire an independent expert to perform a business valuation in order to prevent one spouse from overpaying the other. These experts look at many factors when determining how much a business is worth, including the following:
• The current economy
• Financial records
• The nature of the business
• The value of stock
• The dollar value of intangibles, like customer relations
Once valued, divorcing spouses must negotiate on how the business is to be controlled in the future.
Consider buyout solutions
There are a few options on how to handle a business. If neither spouse wants to continue running the business, it can be sold and the proceeds divided equitably. However, one spouse often desires to keep the business afloat, and a buyout may be the best option.
Also, the cost of a spouse's portion of the asset can be offset with other marital property, including cash, retirement funds or real estate. If one spouse does not have enough financial liquidity for a buyout, he or she can create a settlement with payments to be made over time.
Figuring out what to do with a family business after a divorce can be a challenge. An Illinois divorce attorney may be able to provide legal assistance with the process.
• Submitted by Miriam Cooper, Law Office of Miriam Cooper & Associates LLC, mcooperlaw.com.