One marital asset that can become difficult to divide and distribute in a divorce is a spouse’s share in a business. Even when a spouse may have owned a business before marriage, some parts of the business may be considered marital property and be divided as such.
Generally, if a person owns a business before marriage, the business and the assets in the business are considered nonmarital property. However, as the business grows and becomes more successful, the increase in the business value and newly acquired assets may become marital property. In order to determine the amount of the business that would be required to be divided as marital property, the business would need to be valued for its current worth.
The commingling of business assets with marital assets is also something that may factor into whether or not a business interest can be divided as a marital asset. For example, if marital funds were used to pay for business debts, the spouse who does not own the business can argue that the business is marital property.
A spouse’s nonmonetary contribution to the business is also considered. For example, a court can consider the efforts of the spouse who does not own the business working on a marketing campaign or working as the receptionist for the business without pay in order to make the business a success.
If the business is deemed marital property, dividing the value of the business could mean dissolving or selling the business. If it comes to that, the spouse with an interest in the business can offer to give the other spouse other assets in exchange for leaving the business intact. If the spouses jointly own a business, they can decide to continue operating it together, with new documentation drawn up to designate each spouse’s ownership interest in the business.
Spouses who own businesses or are a part of a family business before they get married can try to reduce the chances that their business will be divided as marital property in a divorce through the use of a premarital agreement. The spouse would also have to maintain the business accounts separately from the marital accounts, in order to avoid the characterization of the business assets as marital property.
Contact an Attorney for Legal Assistance
To find out more about how a divorce can affect your business interest, you need to speak to an experienced divorce lawyer. A divorce lawyer can work with other professionals to evaluate your business and advise you as to which property would be marital or nonmarital property. For more information on property division and other divorce issues, contact the Naperville divorce attorneys at the Roscich & Martel Law Firm, LLC for a consultation.
Source:
http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2087&