How a Business is dealt with in Illinois Divorce

Things can get a bit complex when one person to the divorce owns a business.  Hopefully, good business records have been kept as this will help save time for everyone involved.  Some of the questions that come up are:
  • Does the business have any assets and if so, what are they worth? For example, a dental office will have expensive equipment (the chairs, the x-ray machines, dental instruments, etc) but some other types of businesses may only need a laptop & a telephone to operate. 
  • What does the company's profit and loss statement look like?
  • What is the tax structure of the company? Are taxes paid on a corporate level or do they pass through to the individual's tax return?
  • How much does the business owner take as personal income? 
  • What is the gross revenue of the business and what expenses does the business have?
  • Does the spouse who does not work in the business want any part of the business and if so, to what extent?

   These are just some of the issues that can come up, and the complexity of the issue will in large part depend upon the complexity of the business (or businesses). Usually, the attorneys involved will try to get a good handle on the business by reviewing tax and other documents and by gathering information. Sometimes, a formal business evaluation will need to be conducted by a professional business evaluator. Before going down that road, an honest discussion should be had about the potential benefits to be had from doing so, since they can be very expensive and also take up a lot of time.  If it turns out that the business as a martial asset is worth quite a bit of money, there are different approaches that can be taken. The spouse who does not work in the business usually has no interest in "taking over" the business but is looking for a share of the value of the business- either in cash, in other assets, or to be taken into account in the overall settlement.

   If you or your spouse own a business, don't let this scare you. It is what it is, and is not worth staying in a bad marriage over. First, everyone will want to "know the numbers" by use of carefully crafted discovery questions. Then, together with your attorney, you will want to come up with a solid strategy based on what is going to make the most sense for you given all of the circumstances of your divorce.

    Thank you for taking the time to learn a little bit more about what you can expect in a divorce. Divorce is complicated business and even more-so when there is a business involved.  Make sure that you don't make any mistakes when it comes to how the business gets handled.  If this is something that you are concerned about, give us a call to set up a confidential appointment. 

Carol O'Connor Cadiz
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Attorney & Owner at O'Connor Cadiz Law: Bankruptcy, Injury, Real Estate & Mediation