The pride that you feel because of a family-owned business that you and your spouse built yourselves can turn into frustration if you end up divorcing. This is because you’ll have to determine what happens to the business. There are a few options, including closing the business, but you have to be cautious as you proceed.
Some exes are able to continue to run the company as a team. They simply split the duties up and have an agreement in writing about everything. Another option is that they sell the company. This involves having it valuated and finding a buyer. Finally, one spouse might buy the other out. This can be done through the property division process.
Watch the money
One thing that happens in some divorces is that the spouse who handles the finances for the business will begin to hide money from the business, which is known as sudden income deficit syndrome. This throws the property division settlement off and can lead to them getting more than their share of the marital assets. Because of this possibility, you should carefully review the finances of the business if you’re in the midst of a divorce and aren’t fully aware of this area of the company.
There are many ways that they might hide assets. Paying false payroll or vendor accounts is one way. They funnel this money into an account that they secretly own. Sometimes, they won’t record cash transactions properly. In most cases, this begins when they decide that they will file for divorce or they find out that you filed.
If you have reason to believe that this is occurring in your case, you may benefit from working with a forensic accountant. This individual can review several things to see if there are any inconsistencies. They will check things like public records and go over the books for the business.
Handling the family business is only one of the concerns you have when you’re working through a divorce. Make sure that your rights are being protected and work closely with your attorney to ensure that your best interests are being kept at the heart of every decision.