When two spouses own a family business together and decide to get a divorce, things don’t necessarily have to be messy or complicated. Illinois family law statutes offer several options for divorcing couples who have equal interests in a business. Consulting with a Collinsville, IL family law attorney is the best way to manage a divorce when a business is involved. The Law Office of Robert Elovitz has helped many spouses who are co-owners of a business complete the divorce process as quickly and smoothly as possible.
Contact our office today to schedule a consultation appointment with an experienced family law attorney who can efficiently and skillfully represent you throughout your divorce.
Handling a Divorce in a Family Business–What are the Options?
Illinois divorce law considers “marital” property as property acquired during the time two people are legally married. “Non-marital” property is property acquired by a spouse before they got married. Gifts and inheritances are also considered non-marital property that cannot be included in a divorce decree. Also, Illinois mandates that all valuable marital property must be given a specific monetary value before it can be divided between divorcing spouses.
If you and your spouse created a business after getting married and are now divorcing, you can:
Continue to operate the business as co-owners–this means divorced spouses must push aside their dislike of each other and approach the business as their primary income source only. Disagreements about children, finances, and relationships pursued by either spouse will need to be handled objectively and rationally.
Buy out the ex-spouse’s share of the business–before this can happen, you will need to obtain a complete valuation assessment by a licensed business appraiser. Once you receive a valid appraisal of your family business’s worth, then you can proceed with buying out your ex-spouse’s share of the company.
Business valuations called “market approaches” are based on an appraiser comparing one business with similar businesses that have recently been sold. Another business valuation type called the “asset approach” involves taking the total value of business assets and subtracting them from liabilities. Although not commonly used, income valuation approaches to family business valuations mean calculating the projected income of the business (usually over six months to one year) and using that figure to determine the worth of the business.
Buy-outs can be done as fixed or lump sum payments. If a lump sum payment is agreed to, the spouse taking over the family business will make a one-time cash payment to the other spouse.
Sell the family business as part of the divorce settlement: this is the simplest option for dealing with a divorce involving two spouses owning the same business. Selling the business avoids ex-spouses having to communicate or work together and can facilitate matters involving children. Be aware that if you and your soon-to-be ex-spouse to decide to sell the business, you should have limited non-solicitation and limited non-complete agreements.
Limited non-complete agreements prevent both ex-spouses from opening a similar business in the same area. Limited non-solicitation agreements prevent ex-spouses from soliciting the same customers they previously retained.
Avoid Lengthy Court Proceedings By Hiring a Collinsville, IL Family Law Attorney
We have found that many divorcing couples with co-ownership in a family business neglect the importance of finalizing the distribution of debt obligations. Just because a divorce decree states that a spouse is supposed to pay all credit card bills doesn’t mean that spouse will do as the decree states. When you are represented by a family law attorney in Collinsville, IL, you will get the best legal advice available about possibly refinancing credit card debt to avoid damage to your credit score.
Handling a divorce in a family business also includes matters that are often forgotten, such as life insurance policies, 401Ks, and ensuring the beneficiaries named on policies are individuals you want to receive funds if the unexpected happens. If you wish changes made to financial matters involving beneficiaries, the appropriate representatives of these companies need to be contacted to ensure changes are legally and officially enacted.
The quickest and most straightforward way to finalize a divorce involving a family business is to call the Law Office of Robert Elovitz today. We provide immediate representation by experienced family law attorneys who can help you avoid going to court and enduring a trial that is stressful, costly, and often lasting months.
If you are planning to get a divorce and co-own a business with your spouse, call us today to schedule an appointment with an experienced family business attorney in Collinsville, IL.