Family business owners usually spend a considerable amount of time and energy building their company. If the marriage breaks down and divorce is on the table, there’s a chance that the business will become a central point of contention.
If only one spouse is familiar with the finances of the family business, they may think they have an advantage when it comes to the property division process. In some cases, that individual may start to hide income for the business in ways they don’t think their spouse will notice. This is referred to as sudden income deficit syndrome (SIDS).
How is business income hidden?
There are several ways that a person may try to hide what the business is actually making. They may not record cash sales or they may pay into fraudulent vendor accounts to make it appear that there are more expenses than what’s truly present.
What are the signs of SIDS?
The signs of SIDS are often subtle. It can start well before the divorce is filed, but it will typically start with claims that the business is not doing as well financially as it has in the past. Even though this claim is being made, the partner who has knowledge of the finances may not be making any downward adjustments in their paperwork.
It’s often necessary to have a forensic accountant to review all financial information. This can include a host of documents and locations, including tax records and bank accounts.
Property division matters must be handled precisely because each decision you make now can impact your future. It’s best to consider all options, which may be a bit less stressful if you have someone on your side who can assist you with reviewing everything. It’s best to do this as early in the case as possible so you don’t have to try to make any rushed decisions.
