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What Happens When Business Partners Divorce

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family-businessWhen two people get married, they do not anticipate a divorce. Similarly, business partners do not embark on a business venture with the belief that it will fail. When spouses become business partners and go through a divorce, finances can become very complicated.

Illinois Property Division Law

Under the Illinois property division law, there is tangible and intangible property. Real estate is an example of tangible property while retirement funds, stocks, and business equity are considered intangible property. Both tangible and intangible property is viewed as either separate property or marital property. Anything that each spouse acquired before marriage is classified as separate property. Marital property, however, includes income, assets, debt, equity, and anything else a couple acquired during their marriage. It is important to understand that even if an asset is in one spouse's name, it is considered marital property because it was acquired when the couple was married and could benefit both individuals.

Business Valuation in Illinois

If one spouse received equity in a business while they were married, the other would still be entitled to a share of the business. In the event the spouses were business partners, determining who deserves the business as well as all the income, assets, and debts associated with it becomes tricky. Fortunately, many couples have buy-out clauses in their business documents or prenuptial agreements that make this decision far easier. If a couple does not have any of these in place, shareholders may allow one spouse to buy out the other. However, this is only a viable solution if one spouse is willing to leave the business.

If both spouses would like to continue to be involved in the business, the future and survival of the business will dictate what happens. Sometimes, ex-spouse will decide that their business is their top priority and will continue to manage it together.

To make the right decision for yourself and your business, you should get a business valuation that provides information regarding:
  • What your business is currently worth;
  • How much your business will earn in the future;
  • Debt realization;
  • Inventory; and
  • The financial interest in the business of each spouse.

Contact Our Plainfield Divorce Lawyers

We understand how difficult it can be to end a marriage and potentially lose a business. If you and your soon to be ex-spouse are business partners, it is essential that you reach out to our experienced Plainfield divorce lawyers at 815-666-1285 for a consultation.

Source:

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

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