Wheaton, IL Business Valuation Lawyers

Attorneys Addressing Business Interests in Wheaton, Illinois Divorce Cases

In a high net worth divorce, a couple may need to address unique financial considerations. In many cases, some of the most complex aspects of these divorces will involve business interests. Whether a business is jointly owned, operated by one spouse, or held through multiple entities, questions surrounding its valuation, ownership, and classification as marital or separate property can have a significant impact on the outcome of a divorce.

At Mirabella, Kincaid, Frederick & Mirabella, LLC, our experienced divorce lawyers work closely with clients to address these issues. We have a thorough understanding of the financial matters that may affect our clients, including business valuation methodologies, forensic accounting principles, and the legal frameworks that apply to asset classification in Illinois. Whether a business is a professional practice, a family-owned company, or part of a complex portfolio of investments and partnerships, we can help clients navigate legal and financial concerns to ensure that our clients can complete the divorce process successfully.

Marital vs. Separate Property: Classifying Business Interests

In Illinois, marital property will be subject to division during divorce. One of the first steps to take when addressing business assets will be to determine whether a business qualifies as marital property or separate property. This classification depends on when the business was established, how it was operated during the marriage, and whether marital funds or efforts contributed to its value.

A business may be considered marital property if it was formed during the marriage, if one or both spouses contributed labor or financial resources to the business during the marriage, or if an increase in the business's value during the marriage was due to marital efforts. A business may be deemed separate property if it was established before the marriage and remained entirely independent of marital contributions or it was inherited or received as a gift by one spouse and was not commingled with marital assets. A business may also be excluded from marital property using a prenuptial or postnuptial agreement.

In high net worth divorce cases, the issue may become more complex when a business was formed before the marriage but expanded significantly during the marriage. In these cases, a portion of the business may be subject to division, or the non-owner spouse may be reimbursed for their contributions to the business.

The Importance of Accurate Business Valuation

A business valuation can be a critical factor in a divorce involving significant business interests. Even if a business is not classified as marital property, a valuation will be necessary to ensure that both parties understand the resources available to the business owner. Business valuations may be performed using several approaches, including:

• Income Approach: The company's future earnings or cash flow may be evaluated to gain an understanding of projected income and growth.
• Market Approach: Comparisons to similar businesses that have been sold can help determine how much may be obtained if a couple chooses to sell the business.
• Asset Approach: The total value of the business's assets may be calculated, and liabilities will be subtracted to gain an estimate of the value of what the business owns.

The choice of method to use may depend on the type of business, its structure, and the availability of reliable financial data. A valuation will require a careful examination of financial statements, tax returns, business records, and market trends. Our attorneys can help ensure that valuations are conducted by qualified professionals and that the results are considered correctly during the property division process.

Options for Addressing Business Ownership

Once a business has been valued, it may be necessary to decide how to handle ownership going forward. There are several options available, including:

• Buyout: One spouse may buy out the other's marital interest in the business, either through a lump-sum payment or a structured settlement. This option will allow the business to continue operating under one owner without disruption.
• Offset With Other Assets: Instead of a direct buyout, one spouse may retain full ownership of the business in exchange for giving the other spouse a greater share of other marital assets, such as real estate, retirement accounts, or investment portfolios.
• Sell the Business: In some cases, it may be necessary or desirable to sell a business and divide the proceeds. This may be the best option if neither spouse is willing or able to maintain sole ownership of the business.
• Co-Ownership: Some spouses may agree to maintain joint ownership of a business after their divorce. This may be a good option if both spouses are essential to a business's operation. This arrangement will require a high degree of cooperation and clearly defined roles, which can help prevent disputes over how the business should be managed in the future.

Each option carries potential risks and benefits, and the right approach will depend on a person's specific financial goals. Our lawyers help our clients weigh these options carefully, and we will advocate for arrangements that will preserve the value of a business and support our client's future financial security.

Contact Our Wheaton Business Valuation Attorneys

When addressing business assets during your divorce, you can benefit by working with an attorney who can help you understand the legal and financial implications of the decisions you make. At Mirabella, Kincaid, Frederick & Mirabella, LLC, we will advise you on the best ways to protect your financial interests as you address concerns related to the valuation, classification, and division of complex assets. Contact our Wheaton, IL divorce lawyers for business valuations at 630-665-7300 to schedule your initial consultation.