Is a Business a Marital or Separate Asset in an Illinois Divorce?

 Posted on October 20,2022 in Illinois Divorce

Although the divorce rate has somewhat decreased over the past few years, it is still high. Approximately half of all first marriages in the United States end in divorce. Sixty percent of all second and 73 percent of all third marriages also end up in divorce court.

One of the major issues that divorcing couples need to decide is how their marital estate will be divided between the two of them. This can be difficult enough, but when one or both spouses own a business, that equitable division of assets can become very complicated. This is just one more reason why anyone going through a divorce should have a skilled divorce attorney advocating for them.

Is a Business Marital Property?

If the business was formed while the couple was married, the court will likely rule that the business is a marital asset. This applies no matter what type of business structure – partnership, LLC, or corporation – that the business was formed under.

If the business was formed prior to the spouses getting married, there is still the possibility that the court will decide that the other spouse is entitled to a share of the business growth and profits that occurred during the marriage.

Financial Accounts

Depending on the size of the business and whether or not the spouse who owns the business set up a legal business structure, there could be a question of whether business assets are marital or separate. That line can become murky if there was any commingling of business funds and personal funds. It is not uncommon, especially in small businesses, for the business owner to deposit revenue from the business into their personal bank accounts, including joint accounts with their spouse. There are also situations where small business owners may use funds from their personal financial accounts for business expenses.

Any of those commingled funds could be considered marital assets and be included in the final distribution of the marital estate.

Intellectual Property

Many businesses today have some type of intellectual property ownership, including patents, copyrights, and/or trademarks. There is financial value to these intellectual properties and although they may belong to the business, the court could consider them assets that need to be included in the marital estate distribution.

Contact a Kane County Divorce Attorney

If you are a business owner who is getting ready to end your marriage, consider speaking with a skilled St. Charles, IL asset division lawyer to find out what the best legal course of action may be for your situation. Call Weiler & Associates, Inc. at 630-331-9110 to schedule a confidential consultation.

Source:

https://www.ilga.gov/legislation/ilcs/documents/075000050k503.htm