Family-owned enterprises may have options to consider during a divorce, including selling the business and splitting the proceeds. If you plan to continue operating a business after your divorce, however, you may also buy out your spouse, just as you would a partner.
The Illinois General Assembly describes the equitable distribution laws applied during a divorce by which a judge may divide all marital property and debts as he or she deems fair. Based on Illinois law, you and your spouse may decide to instead negotiate an arrangement to split your company’s assets and liabilities. This may serve as a workable alternative to allowing a family court judge to do it under the state’s fairness laws.
What gives my spouse a right to a business I started?
A business that you started on your own while married generally becomes part of your marital property. The legal reasoning is that the income generated from your enterprise went into your shared household, and it helped pay for its maintenance and upkeep.
If your spouse joined you in operating the company, you may work out an arrangement to co-own it after the divorce, as noted by Forbes magazine. Realigned as two business partners, your ex-spouse may have legal ownership rights that differ from the rights to business income under marital property laws.
How may I keep a business without splitting it with my spouse?
If you received a business as a gift or an inheritance, it may classify as your separate property, and your spouse may not have a right to its ownership. Under these circumstances, an Illinois judge may not require you to provide your soon-to-be ex-spouse with its future revenue.