Small business owners who are going through a divorce often have a complex property division process to go through. They have to deal with the normal aspects of dividing assets and debts, but they also have to factor in the business.
There are times when the business can become a serious issue. One situation that may lead to problems is when only one person in the marriage has knowledge of the business’s finances. That individual may use their unique position in the company to try to alter the outcome of the property division process.
How can they use the business to alter property division?
One way that they might use the business to impact the property division process is by altering the financial records. They may avoid recording cash transactions in the proper place. In some cases, they may create vendor accounts that pay into their own secret accounts so it looks like the expenses are higher than they actually are.
In some cases, the party who didn’t have knowledge of the business’s finances may have thought that the business was doing great and turning a good profit. Once the financial information is submitted because of the divorce, they see a different story. It often appears that the income of the business tanked shortly before the divorce. This is known as sudden income deficit syndrome.
Property division is based on comprehensive and accurate information. When financial records are altered, one party can receive less than they should. Anyone who’s going through a divorce that includes a family business should work with someone who can help them determine if the business records are accurate.