What Happens When Business Co-Owners Divorce in Illinois?

 Posted on July 23, 2025 in Divorce

Divorce can turn life upside down, but the stakes are even higher when you and your spouse co-own a business. Not only is your personal relationship ending, but your shared livelihood may also be on the line. Questions about ownership, valuation, and the division of business assets can make the process overwhelming. A knowledgeable Will County divorce lawyer who is experienced in asset distribution can help you navigate these challenges and work toward a solution that preserves as much stability as possible.

Is a Business Considered Marital Property in Illinois?

Under state law, most property obtained during a marriage is generally treated as marital property, even if it is held in only one spouse’s name. Additionally, if one spouse owned the business before the marriage, any growth in its value during the marriage may also be considered part of the marital estate. Under 750 ILCS 5/503 of the Illinois Marriage and Dissolution of Marriage Act, courts presume that all property acquired during the marriage is marital unless proven otherwise.

Illinois uses an "equitable distribution" approach when dividing marital property. Rather than splitting everything evenly, the court focuses on dividing assets in a fair way. To do this, judges may consider factors like each spouse’s role in building or maintaining the business, the duration of the marriage, and the finances of both spouses.

How Is a Business Valued in a Divorce?

Business valuation is often one of the most critical and contested steps in the divorce process. Before a court can divide or allocate a business interest, it must know its value. Some standard valuation methods include:

• Market Approach: Compares similar businesses that were recently sold

• Income Approach: Examines the company’s current and projected earnings

• Asset Approach: Evaluates both tangible and intangible assets

Each spouse may also hire his or her own financial expert to conduct a business valuation. If the experts reach different conclusions about the company’s worth, these disagreements will need to be resolved through negotiation or, if necessary, in court.

What Are the Options for Dividing a Business?

When spouses co-own a business, there are generally three possible outcomes. One spouse may buy out the other’s interest, allowing him or her to retain full ownership. Alternatively, the couple may agree to continue running the business together after divorce, although this arrangement is rare due to potential conflict. The third option is to sell the business and divide the proceeds, which can be the cleanest solution if neither spouse wishes to stay involved.

Each option has legal and tax implications, so it is important to consult a lawyer and financial advisors before deciding how to proceed.

How Can a Divorce Lawyer Help Protect Your Interests?

Dividing a business during divorce requires balancing legal requirements with the practical realities of running a company. A skilled divorce attorney can help determine whether the business is marital property, work with financial professionals to receive an accurate valuation, and advocate for a fair resolution through negotiation or court.

Taking proactive steps before divorce, such as creating a buy-sell agreement or signing a prenuptial or postnuptial agreement, can also help protect business interests.

Contact a DuPage County, IL Divorce Business Valuation Attorney

If you are facing divorce and own a business with your spouse, you need legal guidance to protect your rights and investments. Contact a Naperville, IL divorce attorney at Law Office of Ronald L. Hendrix, P.C. today by calling 630-355-7776 to discuss your options in a free consultation. Attorney Hendrix is prepared to create a strategy tailored to your situation and protect your rights.