When you’ve built a business with your spouse, divorce doesn’t just end a marriage. It threatens everything you’ve created. The company you started in your garage or that storefront you opened together represents more than assets on a balance sheet. It’s your livelihood, your reputation, and often the result of years of personal sacrifice. Understanding how Illinois courts handle business division can feel overwhelming, but you’re not powerless here.
Knowing If Your Business Is Marital Property
Illinois uses equitable distribution, which means courts divide marital property fairly. That doesn’t always mean a 50/50 split. Whether your business counts as marital property depends on timing and how you’ve managed things throughout your marriage. Started the company before you got married? The portion you owned when you said “I do” usually stays separate. But here’s where it gets tricky. Any growth in value during the marriage might be considered marital property. If you launched the business after the wedding using joint funds, the entire thing is likely on the table for division. These distinctions aren’t just legal technicalities. They determine what happens to the company you’ve poured yourself into. A Troy family lawyer can review your specific circumstances and identify which portions of your business might remain protected.
How Courts Value A Business
Before anyone can divide your business, they need to know what it’s worth. That’s harder than it sounds. Business valuation examines multiple factors:
- Revenue and profit history over several years
- Physical and intellectual assets the business owns
- Outstanding debts, loans, and liabilities
- Your market position compared to competitors
- Future earning potential based on current trends
- Goodwill and professional reputation
Courts typically bring in professional appraisers for this work. These experts dig through financial records, compare your business to similar operations, and assess earning capacity. It’s time-consuming. You’ll need detailed documentation going back years in some cases. Different valuation methods produce wildly different results. The income approach projects future earnings. The asset approach tallies up everything the business owns. The market approach looks at what similar businesses have sold for recently. Your attorney works with the appraiser to make sure the final number actually reflects what you’ve built.
Options For Dividing Business Interests
Once you’ve got a valuation, you’re facing some tough choices. Most divorcing couples handle business division in one of three ways. A buyout lets one spouse keep the business by paying the other for their share. This compensation might come as cash payments, transfers from retirement accounts, or by trading other marital assets like the house. Many business owners prefer this route. You maintain control and don’t have to deal with your ex in daily operations.
Continued co-ownership can work if both of you want to stay involved and you can somehow manage to work together professionally. This requires clear boundaries, detailed operating agreements, and communication skills most divorcing couples simply don’t have. It’s rare, and for good reason. Most people want a clean break. Selling the business gives you the cleanest division but often means accepting less than the company’s worth to you personally. Finding the right buyer takes months, sometimes longer. Market conditions affect what you’ll actually get. Some couples choose this when neither spouse wants to run things alone or when they desperately need cash to settle other divorce issues.
Protecting Your Business Through The Process
You can’t sit back and hope everything works out. Start gathering financial records now. Tax returns, profit and loss statements, balance sheets, accounts receivable reports. Document your role in daily operations and track the hours you’re putting in compared to what your spouse contributes. If your spouse wasn’t actively involved in running the business, make that clear. Courts consider who built the company, whose skills actually drive revenue, and who’s capable of continuing operations after the divorce. A Troy family lawyer can also help you think through tax implications you might not have considered. Some settlement structures hit you with immediate tax burdens. Others defer taxes to future years. Understanding these consequences before you agree to anything gives you real negotiating power.
Moving Forward With Your Business
Dividing a family business requires more than legal knowledge. It demands strategic thinking about your financial future and careful planning to protect what you’ve spent years building. The decisions you’re making right now will affect your income and stability for years to come. Don’t try to navigate this alone. Working with Merel Family Law connects you with attorneys who understand business valuation and won’t let your contributions get minimized during negotiations. Contact us today.
