Wives of business owners need to be careful during divorce

On Behalf of | Jan 18, 2018 | Divorce |

During a divorce, each party has to look after his or her own interests. For women who have always relied on their spouse to handle financial matters, going through the divorce can be scary. Add in a business that’s supported the family, and the situation becomes even more complicated, which can be very uncomfortable.

While every woman who is going through a divorce needs to be aware of the state of the marital finances, this need is increased when there is a business in the picture. There are several reasons why women must know what is going on, but the predominant one is so that the man can’t get away with hiding money.

How would a husband hide assets in a business?

One of the ways that a man can hide assets through the business is by redirecting income from the business. Sudden income deficit syndrome is a term to describe what happens when a man decides that he is going to divorce a woman (or that she is going to divorce him), and he starts to hide income from the business. This can be done in a variety of methods, but fraudulent payments to phony vendors and employees is one common way. Another way is to hide cash transactions that come through the business.

What can the wife do about this phenomenon?

Even women who aren’t involved in the business can keep a close eye for signs that the income is dwindling. Often, this will happen as soon as the man knows that the divorce is imminent. In some cases, he might slowly start to funnel money from the business. It might be beneficial to look at the year-over-year income for the business to see what is really going on.

Who can help to get the real story about the business?

Sometimes, the wife may need to hire a forensic accountant to take a look at the business’ finances. This professional can use a variety of methods to learn about the actual state of the business. A sign that you need to hire one of these professionals is that the business started to lose value or income just as the divorce began. Another is that the man fought about having to hand over financial records, including bank account statements and credit card processing statements.

The income and value of the business are important in a divorce because they can impact the property division settlement. They can also impact alimony. If you think something is amiss regarding the business, it might be worth delving into the records to see what’s really going on.

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