Most Illinois couples understand that divorce is a difficult process that can have a long-term impact. In addition to the emotional challenges of a separation, there are practical considerations. This includes how the divorcing couple will divide any marital assets. When an agreement cannot be reached, the divorce process is lengthened. This is especially true if the asset being discussed is a family-owned business.
Splitting a family business may add another layer to the divorce process, which is already complicated. This is because each spouse needs to figure out how much they want to be involved in the business after the divorce. There also has to be an agreement on the best way to divide the company. The goal is that everyone walks away with something that is going to benefit them financially.
Before decisions can be made on dividing the business, the first step is to determine how much the business is worth. If a divorcing couple doesn’t know the value of the business, they’ll have no concept of what it is they’re trying to divide. Therefore, it’s wise to get formal appraisal using an unbiased third party. After the value has been established, the couple can look at the options they have for dividing the business.
One possibility is for a spouse to buy the other out of the business. This method works because it is tax efficient. In many areas, purchasing direct shares of a business is thought of as a transfer of property incident to divorce. This is a nontaxable event in most circumstances.
Questions about property division and tax laws pertaining to the dividing of assets during a divorce may be answered by a family law attorney. An experienced lawyer could provide a client with advice and counsel. If necessary, legal counsel may also represent the client in court.