Heading toward divorce? Keep an eye on the health of the family business

Heading toward divorce? Keep an eye on the health of the family business

| Apr 23, 2021 | High-Asset Divorce

Does a divorce seem like it’s on your horizon? If you have a family business — and your spouse is primarily in charge of the finances — you may want to keep a sharp eye on what happens next.

When a family business is involved in a divorce, it’s not unusual for “sudden income deficiency syndrome” (SIDS) to occur. This is when a business that always seemed to be thriving suddenly starts experiencing problems and goes into an apparent decline. Your spouse may purposefully try to make it seem that the business is losing money.

Why would someone claim a loss of profits just because of a divorce?

Sudden income deficit syndrome is, at its heart, an attempt by the party in control of the family business to take an unfair share of the marital assets. Hiding the profit or income of the business means that they can access that money after the divorce and avoid paying their fair share of support toward their ex-spouse or children.

How can you find out if SIDS is a factor in your divorce?

Taking a close look at the finances of the business may provide a vital clue. It may behoove you to add a forensic accountant to your divorce team. This professional can help to unearth anything that’s amiss with the business’ finances. It’s also wise to put your hands on as many financial records related to your business and your household expenses, as well. 

Working closely with your attorney can help you to find out the options that you have for your divorce. You should ensure that you’re doing what’s in your best interests, so be sure to think logically about each matter.