Due to precautions related to COVID-19, we have expanded our options for remote consultations. Please contact our office to discuss whether a full phone consultation or video conference is appropriate for your situation.

Serving Families In The Bluegrass Since 1993.

Putting You At Ease, Protecting Your Rights

Family-owned businesses have a unique divorce consideration

| Apr 9, 2020 | High-Asset Divorce

A family-owned business is a source of pride for some couples since it was a mutual goal that took hard work from both people to make it possible. In some cases, one spouse might remain closely tied to the business while the other takes more of a backseat role. This works well sometimes until the couple decides that the marriage isn’t working and decides to file for a divorce. At this point, the spouse who knows more about the business might claim that it isn’t doing as well as what it was in the past.

This can come as a tool for self-preservation, but it isn’t legal for the person to hide revenue during the divorce proceedings. Full financial disclosure, including the information about the income and profits of a business owned by either party, is critical for the property division aspect of the split.

The phenomenon happens more often than what some people realize. In fact, it has been dubbed sudden income deficit syndrome or SIDS. While the name implies that the revenue of the company suddenly dips, this isn’t always the case. It’s possible that the person slowly whittled away at the recorded revenue over time. This might occur if they decided to divorce their spouse long before they actually filed the petition.

Adding a forensic accountant to your divorce team is one way that you can find out if this is occurring in your divorce. It’s imperative for you to have an accurate account of the business’ income and value so you can factor that into the divorce settlement. Your attorney can provide more information on why it’s important to locate hidden assets during your divorce.