Division of Property: Businesses

October 6th, 2025 by Tiffany Hughes

When going through a divorce in Illinois, one of the most complex and emotionally charged questions that arises is whether a business is considered a marital asset. If you or your spouse own a business, whether founded before or during the marriage, it may be subject to asset division in an Illinois divorce.

Illinois follows the equitable distribution approach, which means that marital property is divided fairly, but not necessarily equally. Determining whether your business is a marital asset, how it should be valued, and what happens to it after the divorce requires careful legal and financial planning. In this post, we’ll explore how businesses are divided in an Illinois divorce, the various business valuation methods, and what steps you can take if you’re wanting to protect your business during you’re an Illinois divorce.

Identifying Marital vs. Non-Marital Assets

One of the first steps in any divorce involving property is determining which assets are considered marital assets and which are non-marital assets. Generally, marital assets include any property, income, or business interests acquired during the marriage. This may include a business that was started by either spouse or jointly run during the marriage.

If the business was established prior to the marriage, maintained separately, and kept free from marital contributions (such as time, labor, or funds), it may be considered a non-marital asset. However, even a business that began before marriage can be partially marital if it appreciated in value due to joint efforts or if marital funds were used to support it.

Asset Division in Divorce Under Illinois Law

Illinois is an equitable distribution state, which means that property is divided fairly, not necessarily equally. When dividing marital assets, courts consider a range of factors, including the length of the marriage, the financial circumstances of each spouse, and contributions to the marital estate.

So, how are businesses divided in an Illinois divorce? Unlike cash or physical property, a business is not something that can be easily split. If both spouses want to retain ownership, they may agree to continue running it together. If one spouse wishes to keep the business and the other does not, then a buyout may be necessary. In some cases, the business may need to be sold entirely.

Business Valuation Methods

Before a business can be awarded to one spouse or another or otherwise equitably divided during an Illinois divorce, it must first be valued. Determining the monetary worth of a business is essential to ensure that both spouses receive a fair share of the marital assets. Common business valuation methods include:

• Market Approach: Compares the business to other similar businesses that have been sold recently to determine value.
• Income Approach: Focuses on the business’s current and projected earnings to calculate its value.
• Asset Approach: Evaluates the business based on its assets minus its liabilities and depreciation.

Choosing the appropriate valuation method depends on the nature of the business, industry norms, and the availability of financial data.

What Happens After the Business Is Valued?

 Once a business has been valued, the next step is determining how it will be handled in the property division process. If both spouses wish to continue running the business, they may agree to maintain joint ownership with clear roles and boundaries post-divorce. This is rare but possible in amicable divorces.

If only one spouse wishes to retain the business, they must compensate the other through a buyout. This buyout may involve awarding the non-retaining spouse a larger share of other marital assets, such as retirement accounts, equity in the home, or maintenance payments designed to offset the value of the business being retained.

How Can You Keep Your Business Legally Separate from Your Marriage?

Many business owners want to know, “How can you keep your business legally separate from your marriage?” The best way to ensure your business remains a non-marital asset is to plan ahead. Strategies include:

• Executing a prenuptial or postnuptial agreement clearly identifying the business as a non-marital asset
• Keeping personal and business finances completely separate
• Not using marital funds to support or grow the business
• Avoiding your spouse’s involvement in business operations or decision-making

Taking these steps early can prevent costly legal disputes later and protect the business you’ve worked hard to build.

Tax Implications of Dividing a Business in a Divorce

There are also important tax implications on dividing a business in a divorce. For example, if business shares or interests are transferred between spouses as part of a property settlement, there may be tax consequences depending on how the transaction is structured. In other cases, selling the business to divide proceeds could trigger capital gains taxes. Because the tax consequences can be significant, it’s essential to consult both a divorce attorney and a tax professional before agreeing on how the business will be divided.

Dividing a business in a divorce is one of the most challenging and high-stakes aspects of any marital dissolution. Understanding whether a business qualifies as a marital asset, knowing how to protect that business during divorce proceedings, and being aware of how businesses are divided under Illinois law are all critical components of a well-informed strategy. The key to navigating this process successfully is thorough planning and experienced legal guidance.

If you are facing divorce and own a business, understanding business valuation methods, protecting non-marital assets, anticipating tax implications, and negotiating a fair settlement are all critical steps. Whether you hope to retain the business or walk away with your fair share, consulting with an experienced divorce attorney is the best way to secure your future.

Need More Information or Representation?

If you are getting a divorce, give The Law Office of Tiffany M. Hughes, P.C. a call today at 773-893-0228 for a confidential, complimentary 30-minute phone consultation or email Tiffany Hughes directly at Tiffanyhughes@thugheslaw.com. Our entire practice is solely dedicated to the area of family law. We are highly experienced in providing legal representation to individuals navigating divorce in Illinois, including those who are needing guidance on co-parenting with a spouse in the same house, who are dealing with the division of marital assets and non-marital assets, who are seeking answers to questions like how businesses are divided in an Illinois divorce and whether a business is considered a marital asset, who are needing advice on how to protect a business in divorce, who are requiring assistance with business valuation methods for equitable distribution, who are facing complex asset division, who are concerned about tax implications when dividing a business in divorce, who are negotiating or contesting maintenance payments, and who want to know how to keep a business legally separate from their marriage.

About Tiffany M. Hughes, Divorce Attorney, Principal, Managing Partner, The Law Office of Tiffany M. Hughes, P.C.:

Tiffany M. Hughes is a divorce attorney and Managing Partner of The Law office of Tiffany M. Hughes. Recognized as a Top 100 Lawyer in Lawyers Magazine in 2018 and 2019, Super Lawyer from 2016 to date, and in addition to numerous other accolades, Ms. Hughes represents individuals in all aspects of family and matrimonial law proceedings, including litigation, mediation, allocation of parental responsibility (formerly known as custody), parentage, divorce and other child-related matters.

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This blog is made available by The Law Office of Tiffany M. Hughes, P.C. for educational purposes only as well as to give you general information and a general understanding of Illinois law, not to provide specific legal advice. By using this website you understand that there is no attorney client relationship between you and The Law Office of Tiffany M. Hughes, P.C. The website should not be used as a substitute for competent legal advice from a licensed professional attorney in Illinois.  The law changes constantly and we do not go back in time to edit old posts that may be affected by these changes.  If you have any questions about Illinois law, which is the only State this blog and website discusses, please call The Law Office of Tiffany M. Hughes, P.C. for a complimentary phone consultation and do not draw any legal conclusions without speaking to a competent attorney in Illinois first.