Some people know for a while that their marriage is ending. This gives them time to prepare, but it also gives those who are so inclined time to try to work things around so that they gain an unfair advantage when it comes time to divide up the marital property.
For individuals who are going through a divorce that involves a family business, watching out for signs of sudden income deficit syndrome (SIDS) is critical. This could mean that the business is viewed as having less value than it actually has.
What is sudden income deficit syndrome?
Sudden income deficit syndrome occurs when the spouse who’s familiar with the profits and losses of a business alters the books to make it look like the company isn’t making the same revenue as what it previously did. This often happens as a gradual tapering of the income in the period leading up to the divorce.
The methods for doing this vary greatly. Sometimes, they may create fraudulent payroll or vendor accounts where they can funnel money without it looking suspicious. They may stop reporting all cash transactions in the standard manner. Adding a forensic accountant to your divorce team may help you to unearth inconsistencies that point to this phenomenon.
An appropriate property division agreement is based on both sides being truthful about assets. Trying to work things out when there’s a family business in the divorce can be a challenge. Working with someone who can assist you with determining what’s factual regarding the business may be beneficial. It’s imperative that you protect your interests during the divorce so you start your new life on the best foot possible.