Business owners in Illinois who run the company with a spouse and who are getting a divorce will have to decide what to do with the company. In many cases, couples prefer for one person to buy out the other, but this is only possible if the purchaser has enough liquidity to do so. The spouse who is being bought out should also be protected against any future legal claims against the business.
If liquidity is a problem, one person might retain an ownership share while the other person continues as the main operator. The couple may want to create a put/call option that allows the operator to purchase the other person’s ownership at a certain future point, usually after several years. There should be full financial transparency prior to exercising this option, and the other spouse may have certain veto rights to ensure that the fundamental nature of the business does not change.
There might also be situations in which the couple is willing to navigate the difficulties of running the business together after the divorce. This could be the case if they both enjoy it or if they are making or anticipate making a substantial profit from it. A buy-sell provision may be important in this case. Overall, business owners should work toward a mutually beneficial arrangement.
Couples who are getting a divorce should not assume they will have to go to court to reach a settlement involving property division. Many couples are able to negotiate an agreement outside of court. Their attorneys can help with this, and it can be less expensive and stressful than litigation. Other types of property may raise additional issues. For example, if they want to sell a home but cannot do so right away, they might need to decide how to split expenses associated with it.
