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Preventing Your Business from Ending with Your Marriage

Posted on in Property Division

Preventing Your Business from Ending with Your MarriageWhen owning a small business, your personal income and assets can easily overlap with those of your business. Thus, your business must be accounted for during the division of marital property, even if your spouse does not contribute to it. Divorce can have a negative effect on a small business if a reasonable settlement cannot be reached. Your spouse may have a right to a share of your business or to marital properties of equitable value. Any loss of assets or revenue can be the difference between a successful business and one that is no longer profitable. You need to make protecting your business a priority during your divorce.

Business Valuation

Once your divorce has started, the crucial first step is to assess the value of your business. Your spouse is likely to use his or her own assessor, so it is important that you bring in an assessor that can determine an accurate valuation of your business. An assessment will consider:

  • The typical revenue the business generates;
  • The value of its assets;
  • Future profitability based on industry trends;
  • The overall economic outlook; and
  • Intangible assets that add value to the business.

The valuation accounts for not only the raw value of your business, but also what value it gains from your ownership.

Personal vs. Business

Your business may be a marital property, depending on what lengths you took to separate it from your personal expenses. If you used your personal income to finance your business, then your business is a marital property and your spouse has a right to half of your interest in it. If your business predates your marriage and you have managed to keep it separate from your marital finances, the business itself is not a marital property. However, you will need to compensate your spouse for:

  • The value your business has accrued since your marriage; and
  • Business assets you have purchased during your marriage.


If your spouse is not involved in your business, he or she will likely settle for equitable compensation in marital property instead of a stake in the business. Valuable properties, such as real estate, may hold equal or greater value. You must determine what your spouse wants and what you are willing to give up in exchange for control of your business. During these negotiations is when the valuation of your business is important. If your business is valued too highly, you will be giving up an inequitable share of your marital properties.

Divorce and Your Business

Creating a prenuptial or postnuptial agreement can allow you to protect your business in advance. However, it may be too late to create an agreement if your marriage is already headed towards divorce. A Barrington divorce attorney at Joseph M. Lucas & Associates, LLC, can help you make sure that your business stays strong after your divorce. To schedule a consultation, call 847-381-8700.


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