How To Value And Divide A Business In An Illinois Divorce

There is probably no more byzantine and complex process in an Illinois divorce than valuing and dividing a business. The business-operating spouse will always want to keep the business while claiming the business is worthless. The spouse who doesn’t operate the business will want a grandiose share of the business’s value…without really knowing what that value is. A business’s value will surely go to trial or be negotiated fiercely. The business owner and his or her spouse must know how an Illinois court determines the value and division of a business. More importantly, the litigants’ divorce lawyers must understand completely how a business is valued by experts who disagree and how to apply those valuations to the body of Illinois that governs the valuation and division of businesses in an Illinois divorce. Is a Business Marital or Non-Marital In An Illinois Divorce? Every asset in an Illinois divorce must first be determined to be marital or non-marital. “The court shall make specific factual findings as to its classification of assets as marital or non-marital property, values, and other factual findings supporting its property award.” 750 ILCS 5/503 For business interests non-marital property is, typically, property acquired before the marriage or via an inheritance/gift. [T]he following…is known as “non-marital property:” “property acquired before the marriage” 750 ILCS 5/503(a)(3) “property acquired by gift, legacy or descent or property acquired in exchange for such property” 750 ILCS 5/503(a)(1) The non-marital property MUST stay with the party in whose name that non-marital property remains. “[T]he court shall assign each spouse’s non-marital property to that spouse.” 750 ILCS 5/503(d) “Real property and business interests acquired after marriage are presumed to be marital property unless they were purchased with nonmarital funds.” IN RE MARRIAGE OF SCHMITT, 909 NE 2d 221 – Ill: Appellate Court, 2nd Dist. 2009 “The business interest of a spouse acquired subsequent to marriage constitutes `marital property’ subject to equitable distribution upon dissolution.” In re Marriage of Schneider, 343 Ill.App.3d 628, 634, 278 Ill.Dec. 485, 798 N.E.2d 1242 (2003) Businesses that have portions thereof that were acquired before the marriage, ex: a building that was bought after the marriage, will have those potions deemed to be non-marital. The increase in value of those pre-marital properties will also be deemed non-marital. Business properties “owned before the marriage are…nonmarital property. They are no doubt worth more now than they were then. However, the increase in value of […]

from Russell D. Knight | Family Lawyer Chicago https://rdklegal.com/how-to-value-and-divide-a-business-in-an-illinois-divorce/