As a Schaumburg divorce attorney with extensive experience in asset, equity, and business division, I am no stranger to complex situations. In a typical divorce, a family’s future is on the line. I take that very seriously, and I make a point to understand the unique goals of my clients to get them the best outcome possible for the situation.
However, my business division clients are in a slightly different category. The future of their family is on the line, but so are the futures of the families of everyone who works for them.
I understand what is at stake, and I am prepared to offer efficient, effective solutions for the aggressive protection of private business interests. I also apply my skills to ensure that spouses of business owners get what they truly deserve for the support they have provided during their marriages. Anyone with business interests to divide is invited to call my office for a personal consultation.
An Overview of Business Asset Division in Illinois Divorce
The division of assets is a central concern of divorce. However, the equitable distribution of property per Illinois law during a divorce becomes even more complex when one or both of the spouses own a private business.
Privately held companies are different from corporations during asset division. Ownership stakes in corporations can be transferred relatively easily in most cases. Additionally, it is completely reasonable and normal for someone to have a stake in a corporation without contributing significantly to its management.
The same is usually not true of partnerships and individual proprietorships. These are business structures in which the owner and the company are much more closely intertwined. Dividing them demands attorneys to perform the daunting task of separating the proprietor from the individual proprietorship, or the partner from the partnership.
This can be an emotionally complex process. However, it comes down to the following procedures in practice:
- Getting a complete valuation of the business.
- Evaluating the portion of the business that is subject to division.
- Dividing the business in a fair and equitable manner.
You Need an Experienced Business Division Attorney on Your Side
The division and valuation of business assets is not an easy task, as it involves many intricacies. If your divorce involves a company, you need the legal assistance of an experienced business division attorney.
At the Law Office of Fedor Kozlov, P.C., we have successfully represented many clients in business division settlements. We have done so in the context of a wide range of complicated divorce proceedings, including child custody, domestic abuse, equity division, and alimony. Our attorneys are well-versed with Illinois laws and are thoroughly prepared to advise you as to the best approach for your business division case.
Understanding How Business Assets Are Divided
Just like a personal asset or debt, the court may consider a business to be marital property. Marital property (as opposed to separate property) is subject to division during divorce under certain circumstances.
There are several qualifications to this rule. For example, if one spouse owned a business before marriage, it might be considered separate property. However, the court may deem any appreciation of the business’s value that occurred during the marriage as marital property. The court is much more likely to do this if the non-owner spouse actively contributed, such as by:
- Making investments in the company
- Participating in daily operations
- Securing partnerships or contracts
- Securing investment capital
- Contributing significantly to the intangible value of the company (goodwill, intellectual property, and so on)
At the Law Office of Fedor Kozlov, P.C., our attorneys analyze your business from all angles and determine what can be considered as marital and separate property. Separate property may include business assets acquired by gift, inheritance, or some parts of the business that started before the marriage.
Apart from determining whether a company is shared or separate, our experienced attorneys also carefully explore every factor influencing the value of the business in your marriage. These factors may include the services or products the business offers, the competitive edge they have in the market, and the total worth of the company’s assets.
For a business to be divided fairly between spouses, it is of paramount importance to appropriately appraise it. This process often goes beyond what you would think of as a simple book or market valuation, requiring thorough and sometimes itemized analysis of various aspects of operations, finances, assets, and liabilities:
- Value of client goodwill or loyalty
- Brand perception
- Income history and projection
- Institutional or shareholder loans
- Loans from one of the spouses or a spouse’s family member
- Income from the sale of assets or security
- Pending or standing orders
- Deprecation or appreciation of assets
- Goods in transit or in holding
- Savings, escrow, investment, and checking accounts
- Intellectual property
- Recent capital gains, losses, or investments
- Accounts payable and receivable
Why Precise Valuation Is Essential
Great care is necessary to ensure that the community property interests of each spouse are protected. The need for this level of accountability is relatively simple: Opposing parties tend to disagree with anything they can if they believe the valuation does not serve their own best interests.
For example, imagine that your spouse did not want to have any part of maintaining or owning a business you were mostly responsible for operating. It would therefore be reasonable to assume that you would end up with full ownership after negotiations were complete.
In this scenario, it would probably be in your spouse’s best interest to maximize the valuation of your company. This is because the more the business was worth, the more you would have to give up to obtain your spouse’s share.
The Process of Dividing a Company
The idea of dividing a company often brings up images of cutbacks, liquidations, or reductions in operating capacity. In actuality, this does not always have to be the case.
Splitting a company can be as easy as buying out your spouse’s share. The challenge is not usually in this process, but in securing the resources necessary for a sustainable ownership strategy. Some examples of how people do this include:
- Getting an institutional loan to finance the purchase
- Exchanging a portion of another large marital asset, such as vacation properties or art collections
- Paying out of separate property
- Borrowing money from family members or using other types of non-institutional finance
- Continuing shared ownership after the marriage, but possibly with a new business formation or management agreement
As you can see, there are options. Careful and strategic negotiations might reveal opportunities for each spouse to get a fair deal while still maintaining the integrity of a successful business.
The methods depend on the situation, of course. In some cases, spouses even continue to work together as business partners under a new formal partnership agreement after their divorce dissolves the informal joint ownership they had during their marriage.
Going to Court for Business Division
Using the final valuation as a starting point, the court will decide whether it is separate property or marital property. If it is marital property, it may be sold, retained by one spouse completely, or divided in many different ways. While knowing what a Judge might do can give you a strong negotiating position, it is typically not the best course of action to go to court.
You will have a far greater level of control and self-determination in negotiations than you probably would in a courtroom. Judges typically have neither the time nor the inclination to determine the most profitable outcome for you — they will simply decide on what they believe is fairest based on all of the facts available to them. Aside from the lack of control, litigation also tends to be highly public, costly, and slow.
Contact Experienced Business Division Attorneys Today
Regardless of the disadvantages of court versus negotiation, we build our cases to win in front of a judge. We collect all of the facts so you have the best possible chance at getting what she deserves.
Our attorneys work closely with finance professionals to get the most precise and indisputable valuation of your business possible. Based on the specific circumstances of your divorce, we will come up with effective solutions and fight for you, defending your rights.
Our priority is giving you the legal counsel you need to protect your business assets and financial interests. We know how Illinois law decides how a business is divided during a divorce, and we are ready to put that knowledge to work for you.
Whether you have built the business through your hard work alone or helped your spouse in making their business as successful as it is today, we will diligently assess your business and pursue your case aggressively to get you your rightful share. Contact the Law Office of Fedor Kozlov, P.C., today at (847) 241-1299 to schedule a consultation with one of our experienced attorneys.