On behalf of Stange Law Firm, PC posted in Property Division on Monday, February 20, 2017.
Illinois residents who own a business with their spouse may have a difficult time dividing that asset in a divorce. Because many business owners hold the majority of their wealth in their company, it’s usually not that simple for one spouse to just buy out the other spouse when they go through a divorce. In many cases, divorcing business owners who do not want to keep working together are forced to sell their business and divide the profits.
It is possible for one spouse to buy out the other spouse’s share in the business after a divorce. However, unless a divorcing business owner has a lot of cash, it may be necessary for them to take out a loan to buy out their ex-spouse’s share in the business. Another option is to add a new partner to the business that can buy out the ex-spouse’s share.
Before a business can be divided in a divorce settlement, it will have to be properly valuated by a professional. If it is not possible to take on a new partner or get a loan, divorcing spouses could create a property settlement note. A property settlement note is an agreement for one spouse to pay off the other spouse’s share over a long period of time with interest.
Dividing a business in a divorce is a complicated process, so an owner may want to seek advice and guidance from an attorney. An attorney cold help such a client to understand the business implications of various property division scenarios and then help to structure the settlement agreement.