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How a Spouse May Use a Business to Hide Assets During Divorce

Posted on in High Asset Divorce

Kane County asset division lawyerDuring a couple's divorce, all aspects of their finances should be considered to ensure that their marital property can be divided fairly and equitably. When a spouse is a business owner, this process can become very complex. In some cases, a person may attempt to use a business to hide assets in hopes that they can keep money or property for themself and avoid dividing these assets with their spouse. When one spouse owns and operates a business, the other spouse can work with an attorney to identify any assets that have been concealed and ensure that all of their marital property is considered during the divorce process.

Methods of Hiding Assets Through a Business

A business owner may come up with a variety of ways to conceal money from their spouse as a way to gain a financial advantage during and after their divorce. These include:

  • Nonexistent employees - If a business owner pays a salary to a person who does not exist, company records will show that these payments were made, but the amount may actually be transferred into a separate account and held by the business owner until after completing their divorce.

  • Payments to family members or friends - What may look like legitimate purchases by a company or the payment of expenses may actually be money that a business owner is transferring to other people to hold on their behalf. They will then plan to have the person transfer that money back to them after the divorce process is finished.

  • Underreporting income - A business owner may attempt to decrease the business’s reported earnings by accepting cash or “in kind” payments and keeping these amounts off the books.

  • Overpaying taxes - A spouse may intentionally pay too much in taxes and plan to claim tax refunds to get this money back after their divorce has been finalized.

  • Delaying deals - A business owner may wait to complete certain business activities until after their divorce. This may include waiting to close certain deals or sign contracts or allowing debts owed to the business to be temporarily deferred to ensure that any payments received will not be considered during the divorce process. A business owner may also delay the payment of bonuses, commissions, or stock options so they can reduce the amount of their reported salary.

  • Undervaluing business assets - If a business is considered marital property, it will need to be divided along with other assets owned by the couple. The business owner may attempt to manipulate the business valuation process, claiming that the business is worth less than its actual value. If they will be maintaining full ownership of the business, this may allow them to receive a disproportionate share of the marital estate.

Contact Our Kane County High Net Worth Divorce Attorneys

If your spouse is a business owner, Goostree Law Group can help you identify any of their attempts to hide assets, and we will ensure that your marital estate is divided properly. We can help you work with a forensic accountant to review a company’s finances and uncover any issues that would affect the property division process. To set up a free consultation and get the legal help you need, contact our St. Charles asset division lawyers at 630-584-4800.

 

Sources:

https://www.forbes.com/sites/jefflanders/2012/03/14/divorcing-women-heres-where-husbands-typically-hide-assets/?sh=1d8d09ed6579

https://www.wife.org/ss-hiddenassets.htm

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