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Strategies for Protecting Your Business in an Illinois Divorce

Posted on in Property Division

Wheaton family law attorneysDivorce is extremely common in the United States. In fact, an estimated 40 to 50 percent of all first marriages end this way. Perhaps even more common is divorce among entrepreneurs, who often sacrifice time with their families to spend countless hours building their businesses. Sadly, many learn that their spouse is entitled to far more of the company than they predicted, and some have even lost their businesses because of divorce. Thankfully, there are strategies that entrepreneurs can use to protect a business in a divorce. Learn more about them in the following sections, and discover how a seasoned divorce lawyer can help to improve the outcome in your case. 

Businesses as Marital Assets - A Closer Look at What is at Stake

Whether started before the marriage or once it began, businesses that are not protected by a prenuptial agreement or postnuptial agreement are usually considered a marital asset. That means your spouse could be entitled to a share - how much depends on the contributions that they made during the marriage. Note that contributions are not just monetary, such as offering funds to stimulate company growth; a contribution can also mean staying home with the children so that the entrepreneur can network and attend meetings. If the family had to make substantial sacrifices during the business’s early years, this, too, could be considered a contribution to the business’s growth and success. It is also important to note that spouses who work as partners or contribute to the business directly are often entitled to even more shares of the company. 

Protecting Your Business in an Illinois Divorce

The most effective way to protect a business in divorce is through a prenuptial or postnuptial agreement. Unfortunately, if neither document was created prior to divorce proceedings, the parties must use other strategies to protect their company. Such methods can include:

  • Phasing out a spouse as a business partner - The longer your spouse plays an active role in the business, the more their share in the company is likely to increase. If your marriage is already on the rocks but not currently in the midst of proceedings, it is recommended that you attempt to phase your spouse out of the company as quickly and completely as possible; 
  • Sacrificing other assets to keep the business intact - While it may seem smarter to allow your spouse to take a share of the company during a divorce, the potential future earnings of a start-up company could be far more valuable than anything you currently own. As such business owners are encouraged to consider giving up the house, retirement pensions, or other assets to keep the business intact;
  • Obtaining a private valuation of the business - Business owners are encouraged to have a private valuation done in addition to the one done by a court-appointed professional, as this can decrease the risk of having an inaccurate value assigned to the company. Keep in mind that your spouse may also hire someone to perform a valuation to protect their own interests, so you may need to agree on a value, which is rarely a straightforward process. As such, it is critical that you also have an attorney on your side, protecting your interests; and
  • Hiring a seasoned divorce lawyer with business division experience - Not every divorce lawyer is skilled in handling business divisions, and that can place your business at risk. Reduce the potential for loss by ensuring you hire a lawyer that has extensive business division experience. 

Contact Our Wheaton Divorce Lawyers for Seasoned Legal Assistance

When the future of your business is on the line, Davi Law Group, LLC is the firm to trust. Seasoned and experienced, our Wheaton divorce attorneys can protect your business before and during your marriage by assisting you with a prenuptial or postnuptial agreement. If it is already too late to take preventative measures and a divorce is on the horizon, we can help to ensure your financial future is fully protected. Schedule a personalized consultation by calling 630-580-6373. 

Source:

 

https://www.entrepreneur.com/article/220124

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