Dividing a Business in an Illinois Divorce: What You Need to Know

Divorce is never simple—but when you or your spouse own a business, things get even more complicated. Beyond the emotional strain, you must determine how your business will be treated under Illinois divorce law. Whether you both built the business together, one spouse started it before marriage, or it grew during your relationship, understanding how to value and divide it properly is crucial.

Is Your Business Separate or Marital Property?

Illinois follows equitable distribution laws, which means marital assets are divided fairly—but not always equally. Only marital property is divided in a divorce; separate property remains with its original owner. That’s why determining your business’s classification is one of the first steps.

Generally, a business started or acquired during the marriage is presumed to be marital property. However, a business may be classified as separate property if:

• It was owned before the marriage.

• It was acquired using separate (non-marital) funds.

• It was received as a gift or inheritance.

• It was explicitly listed as separate in a prenuptial or postnuptial agreement.

It’s also important to note that separate assets can become marital over time through commingling (mixing personal and marital funds) or transmutation (intentionally converting property into marital assets).

Factors Courts Consider When Classifying a Business

Courts look closely at the facts surrounding both the business and the marriage. Some of the most influential factors include:

• When the business was created or purchased.

• How much marital versus separate funds were invested.

• Each spouse’s financial and time investment in the business.

• The growth and appreciation of the business during the marriage.

• Whether either spouse contributed indirectly by supporting the business owner.

Even if a business is deemed separate property, a spouse may still have a claim to its increased value or profits if their efforts or marital funds helped it grow.

Valuing and Dividing a Business in an Illinois divorce

Once it’s clear that the business is marital (or partly marital), the next step is determining its value. Courts often rely on business valuation experts who assess the company’s assets, income, and market position.

Spouses have several options for dividing the business interest, including:

1. Buy-Out Agreement
   One spouse buys out the other’s share using liquid assets or by giving up other marital property of equal value.

2. Co-Ownership
   Some spouses choose to remain co-owners post-divorce if they can maintain a professional relationship.

3. Selling the Business
   Selling the company and dividing the proceeds can be the cleanest option—but it may not work if one or both want to continue running it.

4. Profit or Income Sharing
   In some cases, the non-owning spouse may receive regular payments or a share of profits as part of the divorce settlement.

Protecting Your Business During Divorce

When business ownership and divorce intersect, the outcome can affect your financial stability for years to come. Proper documentation, clear accounting, and experienced legal representation are key. An experienced Illinois divorce attorney can help ensure your rights are protected, your business is valued fairly, and you receive an equitable outcome.

At AKL Legal, LLC, we help business owners and their spouses navigate complex property division and family law issues across Lake County, McHenry County, and suburban Cook County.

Schedule a consultation today to protect your assets and your future. Call 847-262-9888.