Splitting the Family Business in an Illinois Divorce

 Posted on July 13, 2017 in DIvision of Property

Small, family-owned businesses have made a comeback over the last several years, and they were instrumental in our country's post-recession recovery. Unfortunately, family businesses still face some unique and potentially devastating challenges; one of the most concerning is the risk of failure, closure, or liquidation during a divorce. If you have a small family-owned business and would like to avoid liquidation or closure, the following information may help.

How Family Businesses Are Treated in Divorce

Family-owned businesses are typically considered marital property during a divorce. There are a few exceptions, of course. For example, a business might be considered a non-marital asset if one party started the company before the marriage began and never used marital funds for business-related expenses. Even in these situations, couples are encouraged to speak with an attorney. After all, many nuances, exceptions, and exclusions can alter the outcome of a divorce case; businesses often complicate the already complex process even further.

More Than Just a Business

If you and your spouse built your business together, each of you might have more than a financial stake in its fate; there could also be emotions tied to the outcome of your case, such as grief, resentment, or fear. Sadly, those heightened emotions can also create a great deal of contention during the divorce process. Ultimately, this can drag out the divorce process, and it may even place the parties at risk of financial loss. Even worse, the business could be forced to close if parties are unable to reach an agreement.

Protecting Your Family Business in Divorce

While it is possible to joint-own a company with your spouse after a divorce, it is often considered a bigger risk than simply dividing the business through a buyout or liquidation. The reasoning behind this relates to the contention and animosity that couples may experience during the divorce. If severe enough, that tumultuous situation could be the company's demise.

How do you protect your business from such a fate? It is generally recommended that you first contact an attorney and ask for a valuation of the business. Then, once you know the true value of the company, you and your spouse can attempt to negotiate the terms of your divorce. Just ensure that you have an experienced attorney on your side, protecting your interests, every step of the way.

Contact Our DuPage County Divorce Lawyers

Source:

http://www.chicagobusiness.com/article/20130511/ISSUE02/305119997/family-business-and-divorce-a-six-step-survival-guide