Is My Business Considered Marital Property in Illinois?

If you thought that nothing could make divorce more complicated than it already is, you might be surprised to learn that business ownership can do just that. If you own a business and are concerned about how the division of your marital property in your divorce will affect that business, it’s time to consult with an experienced Chicago complex divorce attorney.

Your Marital Property

When it comes to divorce, Illinois is what is known as an equitable distribution state. When broken down, this means the following:

• Those assets that you bring into the marriage with you – and keep separate over the years of your marriage – amount to separate property that will not be included in the division of your marital assets.  You will also hear the term, non-marital property – when discussing this type of asset or allocation of assets.
• Any assets that you acquire while you’re married (or contribute to during the marriage, such as a business) can amount to marital property, which must be divided between you fairly and equitably in the event of divorce.   

Is Your Business Separate Property?

If your business is strictly separate property or your non-marital property, you won’t need to address your spouse’s ownership in it or rights to the business ownership, shares, assets and the like in relation to your divorce, but the fact is that keeping a business (or any other asset) strictly separate throughout a marriage is an exceptionally high bar. If any of the following apply to your situation, there is a distinct possibility that the dividing line between separate property and marital property is less clear than you would like:

• Your spouse worked for the business.
• You allowed business and personal finances to intermingle. 
• You ran the business on a full-time basis but failed to compensate yourself at the market value (thus leaning on your family’s finances to pick up the slack).
• You invested personal funds to help grow the business.  
• You established the business during the marriage.
• The business was grown or value increased during the marriage.
• Your business paid expenses.

Therefore, any of these items may indicate that the business is a marital asset that will need to be addressed as such. 

Defending the Separate Nature of Your Business

There are several proactive steps you can take that can help you maintain the separate nature of your business over time:

• A prenuptial agreement can nail down the separate nature of a business from the outset. 
• A postnuptial agreement can delineate how the business will be addressed in the event of divorce, which can expedite the process and can specify how the business’s value will be determined and items allocated.
• The way your business ownership structure is set up can play a pivotal role in whether or not it remains separate property.

Your Business’s Value

If your business – or part of it – is deemed marital, the rest will hinge upon its value, and obtaining a valuation that you are both willing to accept as accurate is likely to be an arduous process in which the court may intervene or appoint an expert business valuator.

It’s Time to Consult with an Experienced Chicago Complex Divorce Attorney

Nothing complicates a divorce like business ownership does, and the seasoned Chicago complex divorce attorneys at WARD FAMILY LAW have a wealth of impressive experience helping clients like you successfully resolve their divorce-related business ownership concerns. We are here for you, too, so please don’t wait to contact us for more information today.