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Geneva family law attorneyDivorce 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.

Kane County family law attorneyFamily-owned businesses are the backbone of the American economy. Some 90 percent of all businesses are family-owned or, at the very least, controlled by the families who started them. Many owners of family businesses look forward to the day that they can turn over the day-to-day operations to the next generation, never even considering how a divorce might wreak havoc on their professional and business-related plans. If you are a business owner who is thinking about getting married, you may want to execute a prenuptial agreement to be sure that your company is not affected by a potential divorce.

Marital or Non-Marital Property

According to Illinois law, if you own a business prior to getting married, your existing interest in the company will, in most cases, be considered separate or non-marital property in the event of a divorce. Things can get very complicated, however, as you make improvements to your business and invest your personal efforts in increasing the company’s value during your marriage. Depending on the specific circumstances, the increase in value and retained earnings generated by your business during your marriage could be considered part of the marital estate and, therefore, subject to division in divorce.

business valuation IMAGETen years into the marriage, your spouse comes to you tired and cranky and declares that he wants to start his own business. You know you look surprised on the exterior but on the interior your stomach is doing somersaults.

He explains that he is tired of working for someone else and padding the pockets of an unappreciative tyrant. He knows he can be successful in his own adaptation of his career choice. Trying not to hyperventilate you squash your feelings of nausea and try to smile supportively.

He continues to verbalize his business plan while you calculate the monthly budget and balance of each child's college fund in your swirling mind. What were those vows, for better or worse?

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