For many people, a family-owned business is a source of pride because it’s the fruition of hard work. Many people don’t realize that it can become a big challenge if the owners go through a divorce. While some individuals might have to determine whether one partner will buy the other out or how both will continue to play a role in the company, others have another issue to contend with.
When one spouse handles all the financial matters related to the business, the other spouse has to be careful if they divorce. If you’re the spouse who isn’t intimate with the finances of the company, you need to be on the lookout for signs of sudden income deficit syndrome, which is sometimes dubbed SIDS.
There is a chance that your spouse started funneling money out of the business once they realized divorce was imminent. They might suddenly be claiming that the business isn’t as profitable as it once was. You should consider adding a forensic accountant to your divorce team so that you can find out what’s really going on.
The methods for trying to funnel money away from a privately held business vary greatly. Fraudulent vendor accounts that go into a hidden account your ex controls are one possible way. Failing to record cash transactions and using fraudulent payroll accounts are also possible.
A forensic accountant can help to unearth these types of situations. They can review public records and other information to determine what’s going on. This can help to ensure that both parties are receiving an equitable property division settlement in the divorce.
