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Watch for sudden business losses before and during divorce

On Behalf of | Jul 7, 2022 | family law, high asset divorce, property division |

A family-run business that’s successful can provide for your future. You may not realize that this can quickly become a liability, however, if you and your spouse divorce. If your marriage ends, there’s a chance that your ex might try to make it appear as though the business isn’t as successful as you thought.

In most cases, sudden income deficit disorder will occur if there is one spouse who isn’t familiar with the finances of the business. The spouse who knows about the business’ money can do things that make it seem as though there’s not as much revenue.

How could someone twist the business’ finances?

There are many ways that a person can make it seem like there’s not as much income coming in as what the other person thought. Some examples include:

  • Failing to report cash income
  • Creating fraudulent vendor or payroll accounts
  • Funneling money into accounts controlled by them

It can often be difficult to determine what’s going on in these cases. A forensic accountant might be necessary since they can go through various sources of information to try to find out if the decrease in income coincided with the divorce, as well as whether that decrease was real or a ploy to get more out of the property division settlement.

You must ensure you do what’s necessary to protect yourself during the divorce. This means that you have to pull in professionals who can make sure everything is being reported properly. The risk of fraudulent information about business income is too great to ignore. Your ex underreporting the income of the business can have a negative impact on the property division settlement you receive. Experienced guidance can make sure that you aren’t victimized by a spouse’s deceit.