Dividing Business Interests In Divorce
The short version: hire a lawyer!
If you or your spouse started a new business, purchased a business, became a partner, or otherwise gained an ownership interest in a business during the course of your marriage, Illinois law presumes that the business interest is marital property, subject to division in divorce. This presumption can be overcome if you can prove that the ownership interest meets any of the definitions listed in 750 ILCS 503(a), such as purchasing your business interest with pre-marital funds.
When it comes to dividing the interest between the spouses, a court can only do so if it has evidence as to the value of the ownership interest. Determining this amount typically requires an expert business evaluator, because a lay opinion (meaning the opinion of someone who is not an expert) is not as credible as an expert opinion, and may be given little to no weight by a judge. Business valuations can be expensive. In the Chicagoland area, they run between $5,000-$15,000, usually on the higher end of that range. They can exceed that range depending on the type and size of the business.
You may also encounter litigation expenses (attorneys’ fees, subpoenas, etc.) related to the production of documents and information needed to conduct the evaluation. Thus, when business interests are being divided in a divorce case, you must keep in mind the costs of the valuation process versus your anticipated interest in the value of the business.
It is also important to consider how the value assigned to you will be transferred to you. Many times you see an offset with other assets, or monthly payments if there are no other assets to offset. Of course, there are many more details and considerations that come into play when dividing up business interests, such as how to deal with partnerships, the value of good will, and other types of evidence that can be presented to demonstrate the value of a business when an evaluation is impracticable.
It is strongly recommended that you seek the advice of an attorney before making any decisions related to the division of a business interest. We offer free consultations and are happy to discuss this and other divorce-related legal issues with you.