What Will Happen to My Business After a Divorce?

 Posted on July 05, 2026 in Division of Property

According to a 2024 fact sheet from the U.S. Small Business Administration, 27.3 percent of all U.S. firms are family-owned businesses.When business owners divorce, deciding how to divide the business is often one of the most difficult issues to resolve. What happens to the business depends on how Illinois law classifies it, how it gets valued, and how the spouses resolve the division. 

If you are heading for a divorce as a business owner in 2026, a Rolling Meadows, IL business asset division attorney can help you protect your financial interests before negotiations begin.

Is My Business Considered Marital Property Under Illinois Law?

Illinois divides marital property using equitable distribution. This means that the court divides assets fairly based on each spouse's circumstances rather than splitting everything down the middle. When dividing marital property, courts consider a variety of statutory factors, including each spouse's contributions, the length of the marriage, and each person's financial situation.

Under 750 ILCS 5/503 of the Illinois Marriage and Dissolution of Marriage Act, a business started or grown during the marriage is generally marital property. This means that a spouse who never worked in the business can still have a claim to part of its value. If that spouse raised children, managed the household, or supported the family while the business grew, a court may treat that as a contribution to the marital estate.

If you started your business before the marriage, it is generally non-marital property and would not be divided in a divorce. However, the court may still look at whether marital money or effort increased its value. If marital money helped grow the business, if your spouse worked in it without pay, or if business and personal finances were mixed, the court may decide that some of the business's value belongs to the marital estate. Mixing marital and non-marital property is called commingling, and it is a common issue in divorce cases.

How Is a Business Valued During an Illinois Divorce?

Like any asset, a business must be valued before it can be divided. This is usually where cases get complicated, as each spouse might hire their own financial professional whose different methods produce very different numbers.

The right method of business valuation depends on the type of business. There are three standard approaches to business valuation:

• The income approach estimates value based on expected future earnings. 

• The market approach compares the business to similar businesses that have recently sold. 

• The asset approach calculates total business assets and subtracts liabilities. 

Goodwill is another factor that affects the final business value. Businesses carry two types of goodwill: 

• Enterprise goodwill is tied to the business itself, including its reputation and customer base. Illinois treats enterprise goodwill as a marital asset.

• Personal goodwill is tied to the owner as an individual. Personal goodwill is not divisible. 

The distinction between enterprise and personal goodwill in business valuation is often where the two sides disagree, which is one reason to have legal guidance early in the process.

What Are Your Options for Dividing a Business in an Illinois Divorce?

Once you have a valuation, there are a few ways to resolve the division.

Buyout

A buyout is the most common outcome. One spouse pays the other for their share. The payment can be in cash, in other marital assets, or through a structured arrangement paid out over time. This keeps the business under one owner's control. If an upfront lump sum is not possible, a deferred buyout paid in installments can be included in the settlement.

Selling the Business

Selling the business and splitting the proceeds works well when neither spouse wants to keep running it and both want a clean break. This tends to be the simplest resolution when both parties agree, and the business can be sold at a fair price.

Co-Ownership After Divorce

Co-ownership after divorce is less common, but it is possible. Some former spouses continue working together when their relationship is stable, and both have a financial stake in the outcome. This arrangement requires a written agreement that covers roles, decision-making, and an exit plan for when one party wants out.

If you had a prenuptial or postnuptial agreement that addressed the business, that document likely shapes your way forward with the business during the divorce.

Before agreeing to a resolution, you should also consider the tax consequences. Some divorce-related transfers may not trigger taxes right away, but the tax effects can still matter later. Selling the business may trigger capital gains taxes, and co-ownership comes with ongoing tax responsibilities.

Contact a Rolling Meadows, IL Divorce Attorney for a Free Consultation

At Cosley Law Office, Donald Cosley personally handles every aspect of his clients' cases. When you call with questions, you speak directly with him and not a paralegal. Cosley Law Office offers free consultations, so reach out to an Arlington Heights, IL divorce lawyer or call 847-253-3100 to get started.