When you divorce, everything earned during the duration of your marriage becomes marital property and is divided between the two parties, including any business started during that time. What happens to this investment depends on the specifics of your situation and applicable state laws. Divorce business valuation and the preferred standard of valuation varies by state, in addition to whether they consider personal goodwill as a marital asset.
Here we will discuss general guidelines regarding Illinois law and business values but is not intended as a substitute for direct legal advice. For specific information regarding your case, address your concerns with an experienced DuPage County divorce attorney.
What is a Standard of Valuation?
For divorce and property distribution purposes, a judge requires that a business formed and operated during the marriage to be appraised and given a numeric value. This evaluation allows a judge to more efficiently and fairly divide the assets and debts of an enterprise.
There are three common valuation standards, yet the estimate can be a hybrid of the three. Business interests in Illinois are appraised based on the fair market value, which is to evaluate it as though it is to be sold, rather than considering it as an investment opportunity.
Explanation of Personal Goodwill
A good reputation is hard to earn, and an outstanding one can be invaluable. However, when it comes to property division and business valuation, how much is it really worth? Many states include “personal goodwill” as a factor in divorce and add it as a marital asset.
According to the International Glossary of Business Valuation Terms, personal goodwill is an intangible asset that forms from a name, reputation, customer loyalty, location, products, and other similar factors. In short, the business is worth more because of a business owner and the service it has provided over time.
Although some states include personal goodwill as a factor in business valuation for divorce, Illinois, along with 31 other states, does not.
Ask a DuPage County Divorce Lawyer
As a business owner, if you or your spouse are considering filing for divorce, it is essential to contact a Wheaton divorce attorney as soon as possible. You invested your valuable money and time into creating a successful business, and you deserve the best possible valuation and division. At Andrew Cores Family Law Group, we can aggressively defend your interests. Find out how we can help by calling our office at 630-871-1002 to schedule a free initial consultation.