Properties and Finances

Dividing marital property when one of the spouses is self-employed or has a closely-held business can be the most challenging cases in divorce law. Divorce can bring out the best cheaters out of an individual and,expectedly,either the business-owner will want the business to look bankrupt or the other spouse wants it to look as big as Apple Computers.

Either way, dividing this type of property is essential if you plan to receive child support or alimony.  Therefore, investigating your spouse's real income is warranted as business owners can and do control their expenses and, to a certain extent, their income. 

Ways in which a spouse can cheat income
There are a number of instances by which a spouse can cheat his income (and these are not limited to imagination), but there are some general patterns that fall into these classifications:

Questionable Transactions
Common expenses which the other party can adjust are personal expenses used in the business (such as utility bill, landscaping, or automobile and its associated expenses); depreciation and depletion expenses, or meals and entertainment.If any of these expenses is a shortfall to your household expenditures, it should serve as a warning signal. 

The following may also be classified as questionable transactions:

• Personal expenses recorded as business expenses
• Petty cash abuses
• Inventory abuse
• Things that temporarily drive a business into decline
• Large one-time purchases written off
• Unreasonable owner salary levels

Common Shams
These scenarios should raise suspicion in the spouse wanting to get a piece of the other party's business property:

• Solely dealing and/or inter-family dealing with transactions
• Sudden increases in supply costs
• New suppliers or new customers come out of the blue
• Sudden decrease in gross income
• New or hidden bank accounts
• Delaying income until after the divorce
• Fraudulent bad debt write-offs
• Unreported cash transactions

What you can do
Your major defense against deceptive spouses is to get a financial information in the form of a lifestyle analysis. A lifestyle analysis can accurately:

• prove the actual marital standard of living;
• reconstruct financial statements;
• identify your lifestyle needs at post-divorce;
• document marital expenditures that exceed the stated income

When well documented, a lifestyle analysis can help you and your attorney in negotiating for the right amount of spousal support or, when necessary, conduct further discovery.

Here are additional resources you might be interested in:

Divorce and the Division of Property

How to Protect Your Assets during a Divorce

Who Gets to Keep the House After Divorce?

More information on Divorce Properties and Finances click here.