Divorce is complex; however, dividing property is often most complex aspect of a process that can take a long time. Nowhere is this better illustrated than in the procedure for valuing and dividing a family-owned business. Between personal preferences and the market rates, dividing the value of a business will often create the biggest issues during the process.

Valuation Basics

As one might imagine, Illinois courts only have the ability to divide marital property during divorce proceedings. A family business qualifies as marital property if it is run by both spouses or if one spouse owns a controlling interest. The rationale is that the spouse working there will bring home paychecks earned by improving the business’s value. If the business is deemed marital property, it will be valued so that it and the couple’s other assets can be divided equitably.

Divorce is complex; however, dividing property is often the most complicated aspect of a process that can take a long time. Nowhere is this better illustrated than in the procedure for valuing and dividing a family-owned business. Between personal preferences and the market rates, dividing the value of a business will often create major issues during the proceedings.

Valuation Basics

During a divorce, Illinois courts only have the ability to divide marital property. A family business usually qualifies if it is run by both spouses, or if one spouse owns a controlling interest—the rationale is that the spouse working there will bring home paychecks earned by improving the business’s value. If the business is deemed marital property, it must be valued so that it and the couple’s other assets can be divided equitably.

Division of property is often a major concern for divorcing couples. As an equitable distribution state, however, Illinois law requires that each spouse receive an appropriate, but not necessarily equal, share of the marital property based on the circumstances of the marriage and divorce. There are a number of methods which may be used to divide property and the right one for a given situation generally depends on the specific assets to be distributed and their appraised value. In some cases, a structured settlement may be appropriate.

Liquidity of Assets

Establishing the value of particular assets may be fairly easy or rather complicated depending on their nature. Goods and property, such as a piece of artwork or real estate, and accounts, such as savings or certificates of deposit, can be valuated with a degree of certainty, as such assets could be converted to cash relatively easily. Others, such as the family home, a business owned by a spouse, and long-term investment or retirement accounts may require an actuary or other financial expert to calculate their actual and anticipated value. Many of these type assets are considered nonliquid or illiquid, as they are not easily converted to cash for equitable distribution.

Illinois divorces can be complicated, especially when they involve numerous assets or a family business. The presumption in Illinois is that assets or wealth gained during the marriage will be considered part of martial assets, which are subject to equitable division during a divorce. Equitable division is a fluid term, which can give rise to lengthy and expensive litigation. For example, if a divorce involves a small business (or a big one for that matter), the divorce court has to determine whether it is part of the martial estate.

This determination can be tricky, especially in cases where the business predates the marriage. Fortunately, with proper planning, parties may avoid many of these issues. For example, a small business owner who is contemplating marriage, may contact an Illinois family law attorney to determine whether a prenuptial agreement would be helpful. Prenuptial agreements are a valuable tool, but they must meet the Illinois requirements before they are valid. At minimum, the parties must have separate attorneys representing them during the drafting and execution of the prenuptial agreement. If only one side has an attorney, there will be a presumption of unfair advantage in favor of the party who had an attorney.

On the other hand, if the business is the product of the marriage, i.e., it came in existence after the marriage, the parties may contact their attorney to determine what type of business entity would best serve their needs. For example, a corporation in which the husband and wife have equal shares would remove any doubts as to the distribution. Moreover, the parties may agree to a specific buy-out process in case one party wants to get out of the business. This can be important to ensuring the continuity of the business during a divorce process that can be emotionally charged and prone to vindictive behavior.

According to party planners, a divorce is not a cause to be down anymore. As a matter of fact, some planners are reporting that their businesses have tripled in recent years due to the popularity of divorce parties, not only in Illinois, but all over the country. It may seem like an awkward trend, but the numbers don’t lie. There are party planning businesses all over the country that are reporting upwards trends in these types of parties.

These parties are reported to get a little raucous with Champagne flowing, unique decorations such as voodoo dolls and even divorce cakes. These parties can range in price and are usually take place after the divorce proceedings have ended and a settlement has been reached. Some planners report that lump sum settlements often fund these parties. The parties often take place in nightclubs, dance halls and are arranged in VIP sections of establishments and often are accompanied with limo rides.

Some people may opine that these parties are in poor taste and indulgent while others see it as a way to bring closure to what may have been a bad relationship. Many divorces do not end amicably and may even be drawn out in court. Having a party can be a way to put an exclamation point on a closing chapter and a fun way to move on.