Business Division in Divorce
The division of property during a divorce is a relatively straightforward process in Illinois, as Illinois is an “equitable division” state. This means that all marital property will be equitably divided between both parties. While assets like vehicles or shared savings accounts are less challenging to split, division of a business in divorce can be a much more difficult process.
If the business was started after the marriage, it automatically becomes marital property. It does not matter which party spent the most time growing the business. There are also circumstances where a business started before the marriage also becomes marital property if joint funds were used for the business or the non-owning partner made contributions. Explore the basics of business division in divorce below.
Business Valuation in Divorce
Before a couple goes through the process of divorce in Illinois, it is important to know the value of the assets that will be divided in the divorce. Business valuation in divorce can be determined with these three primary methods:
- Market-Based Approach: This is generally the easiest option. An appraiser will look at recent sales of businesses of the same size and same industry to calculate the value.
- Asset-Based Approach: This approach combines the business’s assets, brand value, and accounts receivable to come up with a valuation. Expertise would be necessary for the appraisal, as it can be difficult to determine the brand’s value in the public eye.
- Income-Based Approach: This method looks at the current and projected earnings of the company to determine the current and potential value of the business.
If each spouse is in agreement, the couple can determine the type of appraisal to use to evaluate the company.
Can You Refuse an Appraisal Amount in a Divorce?
Can you refuse an appraisal amount in a divorce? If the divorce is contested, each party has the option to use a different valuation method to try to convince the court of the business’s value. Each party can hire his or her own expert to determine the business valuation in divorce.
Set Up a Consultation with Conniff & Keleher
Business division in divorce can be a difficult process, which is why it is so important to have the assistance of a skilled family law attorney. To set up a consultation with Conniff & Keleher, contact us at your earliest convenience.
