Family-owned businesses can cause trouble during divorce

| Jul 14, 2020 | Uncategorized |

A family-owned business is often a source of pride for the owners. Many of them don’t realize that they might face some challenges related to the company if the owners end their marriage. Working through the ins and outs of determining what happens to the business can take time, especially if they don’t agree.

One situation that might be especially troublesome is when only one person has an intimate knowledge of the financial matters. There is a chance that the individual will attempt to funnel money out of the business for their own personal gain. This makes the property division process unbalanced because there isn’t accurate information about the business.

Having a dip in income that coincides with the divorce isn’t something that’s uncommon. In fact, it’s been dubbed sudden income deficit syndrome (SIDS) by people who deal with it often. The goal of SIDS is for the spouse with the knowledge of the business to hide money so that it isn’t divided in the property division process. Once the divorce is over, they can go back to get that money. The issue here is that doing this is illegal.

If you think that there is a chance that this is going on in your situation, you can work with your attorney and possibly a forensic accountant to determine what’s happening. This can help you protect your own interests by ensuring that you have all the information you should as you make decisions about the property division process and provide your input about what you feel should happen to the business.