How Is a Professional Practice Divided in an Illinois Divorce?
When going through a divorce, a couple will need to divide up their property. According to the Illinois Marriage and Dissolution of Marriage Act (IMDMA), marital property is divided using “equitable distribution.” This means any property or assets acquired during the marriage must be divided fairly, but not necessarily equally. If one spouse is a doctor, dentist, lawyer, psychologist, accountant, or any professional who owns his or her own practice or business, this can complicate matters. Like any piece of the marital estate, several factors will be considered to determine how to divide a professional practice or business during the divorce proceedings. It is important to seek legal counsel so you know your rights when it comes to splitting this valuable asset.
Factors the Court Will Consider
A professional practice or business is subject to division in a divorce unless there is a valid prenuptial or postnuptial agreement that specifies how ownership of this asset will be handled. In many cases, the court will consider which spouse has contributed the most to the practice and allow that spouse to keep ownership of the practice, while the other spouse will receive marital assets that are of a similar value.
If one spouse opened his or her practice or business during the marriage, it is classified as marital property. On the other hand, if it was started prior to the union, it may still be considered part of the marital estate if the other spouse made significant contributions to establish the practice or keep it running. These contributions may include using marital money to finance the business or working at the practice as an employee.
When allocating assets, the court will also consider whether one partner helped pay for the other partner’s education for a degree or professional license. In some cases, the supporting spouse may be compensated for their contributions that may have led to an increase in value for the practice. This compensation may come in the form of a higher share of the practice’s profits or value. However, the judge may choose to give that spouse a greater share of other assets instead. Other factors the court will take into account include:
The fair market value of the practice/business
How much the practice/business is expected to appreciate or depreciate
Any tax consequences/obligations
The value of the real estate on which the practice/business resides
The value of any equipment used by the practice (if applicable)
Typically, a law firm will work with business appraisers in addition to financial planners/professionals to determine the true value of a practice or business and the ideal methods for dividing these types of assets.
Contact a Wheaton, IL Divorce Lawyer
A person works hard to earn his or her professional degree or license. In the event of a divorce, dividing a professional practice or business can be a complex matter. Whether or not you own the practice, it is imperative to understand your rights during the division of property. The Andrew Cores Family Law Group has handled high-asset and complex divorces, and our attorneys understand the importance of equitable distribution. Our skilled DuPage County property division attorneys can assist you in protecting your share of the marital estate. Call our office today at 630-871-1002 to schedule a free consultation.