How May My Business Be Divided During a Divorce?

Jul 20, 2021 | Divorce, Family Law, Property Division

For spouses who own a business, divorce proceedings generally require the enterprise to be divided fairly under the Illinois equitable distribution laws. This applies to commercial ventures of any size. Small businesses contribute more than 40% to the nation’s GDP; the court views smaller family ventures as valuable property subject to fair division during a divorce.

Whether you and your spouse are partners in a private enterprise or owner-operators of a franchise, a divorce could affect its ownership structure. At least 35% of U.S. small businesses are structured as an LLC, and a divorce may require making changes to an operating agreement or the company’s members.


How May a Business Be Divided Quickly?

Couples who acquired and operated a small business while married may consider divorce as an exit strategy or path to retirement. You may decide that it’s time to sell a shared company and split the proceeds. This may serve as the simplest approach to dividing your business assets.


How Can One Spouse Keep a Business?

If you plan to continue operating a shared enterprise on your own, you may need to buy out your spouse. A fair price may depend on how much capital or sweat equity each spouse contributed to it. Some businesses depend on an owner’s skills and reputation, which may increase the value of a spouse’s contribution.


How Does the Valuation Process Work?

Your business may require a professional valuation to determine its current worth. Based on a review of your business’s financial statements, an appraisal provides a fair market value, which you may use to negotiate a buyout amount. You may also choose to use that amount to trade with your spouse for other valuable marital assets subject to division.

Why Does My Spouse Have a Right to My Business?

Unless a signed agreement verifies a business as your separate property, your soon-to-be ex-spouse may have a legal right to it along with any other assets you acquired during your marriage. If you wish to learn more or need help with a business divorce issue, contact Tengler Law and arrange for a free consultation.