How is a Business Affected During a Divorce in Illinois?

 Posted on December 23, 2022 in Divorce

If you own a business but are considering divorce, you may wonder how the divorce will affect your business. Illinois is an equitable distribution state, which means that most assets gained during the marriage are subject to division in a divorce. This includes businesses.

Here are a few things you should know when navigating a divorce with a business involved.

Businesses as Marital Property

In Illinois, a business that was owned or operated by either spouse before the marriage is usually separate property and not subject to division during the divorce. A business that was started or purchased during the marriage is treated as marital property and will be subject to division between spouses. Spouses may be able to negotiate a property division arrangement during divorce that both parties agree to. Sometimes, one spouse keeps all of the business assets and the other spouse keeps other assets such as vehicles or real estate. Others spouses divide business assets among themselves. Divorcing spouses may also decide to sell the business during divorce and split the profit or use the proceeds to pay off shared debt.

If spouses cannot reach an agreement, the court will make a decision based on Illinois’s equitable distribution laws. Sometimes, the court may decide that one spouse should receive a larger share of the business assets because of their greater financial contributions or their role in running the company.

Valuation of Business Assets

When dealing with businesses during a divorce, it is important to consider all assets involved in order to determine an accurate value for them. Most times, this includes both tangible and intangible assets such as equipment and furniture, intellectual property rights, patents, trademarks, copyrights, customer lists, inventory, and accounts receivable/payable. It is also essential to consider any liabilities associated with the business when assessing its value. The court may appoint an appraiser or other expert to help determine the value of these assets for equitable distribution.

Tax Implications for Business Owners

When dividing a business during a divorce in Illinois, there can be significant tax implications for both parties involved. This can include income taxes from any money or property received by either party and capital gains taxes if any stocks or other investments are transferred between spouses as part of the settlement agreement. It is important for divorcing couples with businesses to speak with their attorneys about potential tax ramifications before signing off on any agreement related to their businesses. This will ensure that both parties are aware of any potential tax liability they could face after the divorce is completed.

Contact an Illinois Family Law Attorney Today

Every situation is unique. Contact our Naperville divorce lawyers to see how a divorce might affect your business. Our attorneys have experience helping clients with businesses to protect their assets and interests during a divorce. We can provide you with the information and guidance you need to make informed decisions about your business and your future. Call Calabrese Associates, P.C. at 630-393-3111 to take the first steps to protect your assets as much as possible.

Sources:

https://www.ilga.gov/legislation/ilcs/ilcs4.asp?ActID=2086&ChapterID=59&SeqStart=6000000&SeqEnd=8300000

https://www.ilga.gov/legislation/ilcs/documents/075000050k503.htm