How is an LLC Treated in a Divorce?
Divorce cases can become complicated, especially when trying to divide a shared business. Illinois is an “equitable division” state. This means that all marital property must be divided fairly, regardless of circumstances. You may be wondering how to determine the value of a business. How is an LLC treated in a divorce? The attorneys at Conniff & Keleher explore business divorce division more in-depth below.
Limited Liability Company and Divorce in Illinois
Establishing a limited liability company (LLC) provides business owners with a structure that protects them from personal responsibility for the company’s debts and liabilities. Owners can benefit from the tax characteristics of a corporation as well as the organizational simplicity of a partnership or sole proprietorship.
Before a married couple or family court judge can determine how to divide business assets in a divorce case, a complete valuation of the business must occur. There will need to be an assessment of the business’ assets and debts.
How to Determine the Value of a Business
A couple has the option to perform their own valuation and agree on the value of the business. However, divorce cases are often contentious in some areas, so hiring an outside business evaluator may be the best option. After the value of the business is accurately determined, the couple will have a more realistic picture of how the assets could potentially be divided. We encourage owners of a business going through a divorce to consider a negotiated divorce, a mediated divorce, or a divorce utilizing the collaborative law process.
Business divorce division can happen in several ways, including:
- Market-BasedApproach:With this method, an appraiser will look at recent sales of businesses of the same size and same industry to come up with a value.
- Asset-BasedApproach:This approach combines the business’s assets, brand value, and accounts receivable to determine the value. Expertise would be necessary for the appraisal because determining the brand’s value in the public eye may be challenging.
- Income-BasedApproach:This option looks at both the current and projected earnings of the company to determine the current and potential value of the business.
Request a Consultation with Conniff & Keleher
If you need assistance in navigating the divorce process, turn to the highly-skilled family law attorneys at Conniff & Keleher. Our attorneys at Conniff & Keleher are skilled in divorce litigation, negotiated divorce, mediated divorce, and divorce utilizing the collaborative law process. We encourage you to set up a consultation with us at your earliest convenience.
