Dividing a business in a divorce can be a contentious and expensive process, so people in Illinois who are starting or who own a business may want to sure they protect it in case of divorce. This can be done with a pre- or postnuptial agreement or in other ways.
The pre- or postnuptial agreement may be created to establish that a business belongs solely to one person and that the spouse does not get any part of in a divorce. However, such an agreement might also be used to determine that the spouse gets a percentage of the value the business acquired after marriage. If both own the company, the agreement might be used to establish that either one spouse will buy the other out in case of divorce or that they will continue to run the business together.
With no agreement in place, a person can still keep records that help ensure the business is divided fairly. Business owners should track all personal and business expenses separately and should be aware that if they pay themselves a salary that is below market value, spousal support may still be calculated based on the market value salary. Cash transactions, funding sources and any pay to the spouse for services should also be clearly documented.
There may be other complications involved in dividing property in a divorce whether or not the couple has an agreement in place about a business. For example, if there is joint debt, there are two separate components to its division. The couple might agree as part of the divorce decree on how to divide it, but creditors do not have to abide by this and may attempt to collect from either spouse. Real estate and retirement accounts may also present complications for property division.