Can My Spouse Claim Part of My Business in a Divorce?

 Posted on March 05, 2025 in Divorce

Divorce is already challenging, but the stakes can become even higher when a business is involved. Many business owners fear that years of hard work could amount to nothing if their business is divided in a divorce settlement, potentially threatening their financial future. Whether or not a spouse can claim part of a business depends on whether it is classified as marital or separate property under state law. Understanding how business divisions work can help owners take proactive steps to protect their assets. An Illinois divorce attorney can provide strategic guidance about navigating this intricate process and working toward an appropriate outcome.

Is My Business Marital or Separate Property?

Illinois follows equitable distribution laws, which means that property is not automatically divided equally, but is instead divided fairly. Factors such as the length of the marriage, each spouse’s marital contributions, and each spouse’s financial circumstances are considered when making this determination. Whether a business will be divided depends on whether it is classified as marital property or separate property.

Marital property entails assets acquired during the marriage, meaning a business started while the business owner is married is likely subject to division. Separate property, on the other hand, includes assets owned before marriage. If marital funds were invested in the business or the non-owner spouse contributed to its growth, the business could partially become marital property.

How Is a Business Valued in a Divorce?

If a business is considered marital property, it must be properly valued before division. The court may use several methods to determine its worth, including:

• Evaluating how much the business would sell for on the open market

• Reviewing past earnings and future profit projections

• Calculating the value of business assets and liabilities

A financial expert may be beneficial in ensuring an accurate valuation, as this can significantly impact the overall divorce settlement.

What Happens If My Business Is Subject to Division?

If a business is classified as marital property, there are several possible options. One alternative is for the business owner to buy out his or her spouse’s share, allowing him or her to retain full ownership. In some cases, the owner may offer other marital assets, like real estate or retirement accounts, in exchange for full control of the business.

Another approach is co-ownership, where both spouses continue running the business together post-divorce. However, this is rare and typically only works when both parties have a strong working relationship. If neither spouse can afford a buyout and co-ownership is not an option, selling the business and splitting the proceeds may be the only viable solution.

How Can I Protect My Business from Spousal Claims?

To reduce the risk of business division in a divorce, business owners can take proactive steps, such as:

• Creating a prenuptial or postnuptial agreement to specify business ownership and ensure it remains separate property

• Keeping business and personal finances separate

• Drafting a shareholder or operating agreement to outline what happens to business shares in the event of a divorce.

Taking these precautions can help protect business assets and minimize disputes during a divorce.

Contact a Kane County, IL Divorce Lawyer for Business Division Guidance

If you own a business and are facing divorce, protecting your financial interests is crucial. A St. Charles, IL divorce attorney at [title]] can help you understand how business division laws apply to your situation and work toward a fair resolution. Contact us at 630-584-4800 for a free consultation to discuss your options.