Property division is often a complex issue those getting divorced face. In many cases, courts must decide which assets can be classified as marital or separate. It often involves major assets, such as real estate and financial investments. This is a process known as equitable distribution.
What happens when you and your spouse own a business together? First, it's important to understand that a business established by you or your spouse before your marriage isn't considered a marital asset. Therefore, separate business assets may not be divided, but could be factored into child support and alimony.
What are my options if my spouse and I own a business together?
Things can get complicated if you and your spouse established a business during the course of your marriage. In this case, there are generally three options:
- Continue operating the business and remain business partners even after your divorce
- Divide the business or sell it over to one party entirely
- Sell the business entirely
The latter two options are usually the most common for divorcing spouses who own a business together.
When a business is split up during a divorce, a value must first be placed on the business, agreed upon by both spouses and finalized by the court. Once the value of a business has been determined, one spouse must pay the other in a buyout. For example, if the business is valued at $1 million, spouse A would pay spouse B $500,000. This option may only work if the business has enough cash or liquid assets available for a buyout.
If two divorcing spouses decide to remain co-owners of a business, personal challenges from their divorce could arise. However, it's not impossible to make this work. Here's an example of how co-ownership would work: Both spouses could agree that one party primarily manages a business, but the other party receives a percentage of assets either as part of an equitable distribution or as his or her contributions to the business.
Why should I consider hiring a divorce lawyer?
Navigating a divorce process while co-owning a business can lead to complex legal issues for many. Not only must you consider the value of your business and how the business assets will be divided, you must also factor in business debts and other liabilities.
That's why it's important to speak to an experienced Illinois divorce attorney who can help you sort these issues out and guide you through this complex process. To learn more about the legal options available to you, contact the legal team at Courtney Clark Law P.C. in Belleville. We offer free and confidential case evaluations to our clients.