What is the Illinois law in terms of how a business is valued or divided in divorce proceedings?
The critical difference among the states is the treatment of what is called “goodwill.” Goodwill has been variously defined but a definition from the International Glossary of Business Valuation Terms defines goodwill as, “the that intangible asset arising as a result of name, reputation, customer loyalty, location, products, and similar factors not separately identified.” Some states do not differentiate what is referred to as personal goodwill and enterprise goodwill. Illinois courts do consider such a difference. Personal goodwill is generally goodwill that is dependent upon the personal efforts of the business owning spouse. In Illinois divorce cases personal goodwill is not considered in the division of marital property but goodwill that is independent of the personal efforts of the business owning spouse is called enterprise goodwill. Enterprise goodwill is considered in the division of marital property.
