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Own a family business? Having no knowledge of finances can hurt in divorce

On Behalf of | May 27, 2020 | Property Division |

When a couple owns a business, there is a chance that only one of them has a working knowledge of the finances of the business. The other spouse may not be concerned about the specifics as long as the income is there for the house. If you’re the one who isn’t aware of the financial aspects of the company and find out that you are going to go through a divorce, you need to pay close attention to what’s going on with your business.

Sometimes, the spouse who knows about the company’s finances will attempt to hide revenue so that they can tip the divorce settlement in their favor. They may claim that the company isn’t doing as well as they led their spouse to believe, but this dip in revenue only happens after the divorce petition is filed.

The situation is commonly referred to as “sudden income deficit syndrome” (SIDS), and it is something to watch for even if you don’t think that your ex would do something like that. There are many tactics that they might use to try to hide income. Payroll payments to nonexistent employees is one of these methods if they’re funneling that money into an account that they control but don’t disclose in the divorce.

You can’t be too careful when you’re going through a divorce. Using a team of professionals, including a forensic accountant, to ensure you get what’s due to you in the settlement can be beneficial. Your team can do some digging to unearth hidden assets that could have an impact on what you walk away with in the divorce.