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How Can I Protect My Family Business During My Divorce?

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IL divorce lawyerDuring your divorce, determining how you and your spouse will divide the property you own is going to be a major concern. This is especially true if you are a business owner. Your business not only represents the investment of time and resources needed to make sure it can be successful, but it may also be your main source of income. To avoid losing a business you have put so much of yourself into and being required to find employment elsewhere, you will want to determine how you can maintain ownership of your business and continue to operate it successfully after your divorce.

Business Valuation and Asset Division

One of the most important things you will need to do during the divorce process is to establish the full value of your business assets. With an understanding of how much your business is worth, you can calculate the total value of your marital estate, which includes all the assets and debts you and your spouse have acquired while you were married.

There are several methods that may be used to determine the value of your business, and by working with accountants and financial experts, you can decide the most appropriate approach. In some cases, you may look at the value of all the assets owned by the business, including inventory, equipment, supplies, accounts receivable, and intellectual property, and subtract the business’s liabilities. In other cases, it may be more appropriate to consider the income currently being earned by the business and the projected growth over the next several years, or you may look at the purchase price of similar businesses that have been sold in your area. By considering all applicable factors, you can establish the monetary value of your business and ensure that it can be considered properly when dividing your marital property.

Some divorcing couples who own businesses choose to sell their business since this makes it easier to divide their marital assets. However, this will not be an option if you wish to continue owning and operating your business. If you want to retain full ownership, you will need to divide the marital estate in a way that allows your spouse to retain assets of a similar value, such as your marital home or other valuable items. If this is not feasible, or if the value of the business is much higher than the value of your other marital assets, you may be able to make arrangements in which you will buy out your spouse’s share of the business and pay this amount off over time, along with interest.

Another option may be for you and your spouse to continue co-owning and co-managing the business as ex-spouses and business partners. If the two of you have already been working together to operate the business, and you will be able to set aside your differences about your divorce and work together professionally, this may be the best approach to take. However, if you do not already have a partnership agreement, you will want to create one, since this will define your individual responsibilities in different areas of your business. Your partnership agreement can also include details about the procedures that will be followed if either of you plans to leave the business in the future or wishes to buy out the other’s share of the business.

Contact Our Will County Business Valuation Attorneys

If you are a business owner who is going through a divorce, the Law Offices of Tedone & Morton, P.C. can advise you on the best approach to take that will protect your financial interests. We can also assist with the creation of a prenuptial or postnuptial agreement that will decide how ownership of your business will be handled in the case of divorce. Contact our Joliet asset division lawyers at 815-666-1285 to set up a complimentary consultation.

Sources:

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

http://www.smbceo.com/2019/11/19/how-to-value-a-small-business-for-divorce/

https://www.inc.com/guides/2010/05/protecting-your-business-from-divorce.html

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