Beware of financial trickery during divorce

On Behalf of | May 26, 2020 | Divorce |

The business that your ex owns might have provided financial support for your family while you were still married. Now that you’re going through a divorce, they are suddenly claiming that the company isn’t making as much money as it was during the marriage. While there is a chance that this is completely accurate, there’s also a chance that there’s some financial trickery going on.

A phenomenon known as sudden income deficit disorder (SIDS) can occur when there’s a divorce involving a family-owned business. It’s common when only one of the spouses is familiar with the financial matters, including revenue and expenditures, for the company. If this is what’s going on in your case, it might be beneficial to have someone look into the possibility that your ex is funneling money out of the business in an attempt to walk away with a more favorable property division settlement.

The term SIDS implies that the financial trickery occurs suddenly when the divorce is filed; however, there is a chance that your ex might have started the process a while back when they decided that the divorce was imminent. The methods used to do this vary greatly, but they can include making payments to fraudulent payroll or vendor accounts. Sometimes, cash payments might not be recorded, or specific transactions are altered to make them appear less profitable.

If you suspect that SIDS is occurring or just want to be sure it isn’t, you may need a forensic accountant on your divorce team. This individual can review the records for the business and delve deeper into the situation if necessary. Valuation of the business might also be in order. Ultimately, your divorce team’s goal is for you to walk away from the split with the most favorable settlement possible.