When you’re going through a divorce and have a business that you share with your spouse, you have to be sure that you’re paying close attention to what’s happening with the company. There’s sometimes an issue that comes up, which is commonly known as sudden income deficit syndrome, that can have a negative impact on the outcome of the divorce.
One of the problems that comes up in these cases is that only one spouse knows about the business finances. This is challenging during a divorce because that spouse could theoretically move assets and income around to where it appears that the company isn’t as profitable as it truly is. In some cases, reviewing public records or looking at social media posts can show that something is amiss.
In many cases, the spouse who’s familiar with the business will start to make small changes so that they aren’t as noticeable as major ones. In some cases, this starts before the other spouse knows about the divorce because the spouse who knows about the business has already decided they’re going to end the marriage and want to boost what they walk away with.
Having an accurate disclosure of the assets and liabilities of the marriage is necessary so that the property division settlement can meet the standards set by state law. Working closely with your attorney can help you to determine what’s going on with the business and other aspects of the divorce. You may find that you have to bring in professionals, such as a forensic accountant, to work with you to ensure you get the divorce settlement you should.