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Watch for Business Deception During Divorce

Posted on in Business and Divorce

Watch for Business Deception During Divorcebusiness in a divorce is at the same time a marital property and a complex entity. It is a major source of income for at least one spouse and has great value as an asset. While it is possible to divide business ownership, it is more common for one spouse to have complete ownership after the divorce. In return, the other spouse is compensated with properties of equal value. However, one spouse may use his or her knowledge of the business to prevent the other spouse from receiving equitable compensation in the division of property. You must be wary of how your spouse may try to deceive you about his or her business during your divorce.

Business Valuation

Your spouse likely has a better understanding than you of the value of his or her business if you are not involved in its operation. During your divorce negotiations, your spouse has an incentive to undervalue his or her business to prevent you from receiving full compensation. He or she may underreport the business’s profits or give a conservative estimate of the business’s future value. There are also ways that your spouse can artificially lower the value of the business, such as:

  • Allowing customers to defer payments for products and services;
  • Decreasing the price of products and services being sold;
  • Making advance payments to employees or for products; and
  • Overpaying taxes with the intention of requesting a refund.

Once the divorce is complete, your spouse will correct these measures in order to bring the business back up to its actual value.

Hiding Assets

Any business owner going through a divorce may try to hide various properties and sources of income associated with the business. In some cases, the owner may claim that a marital property belongs to the business so he or she will be assured to retain it. Owners of large businesses have more complex ways to deceive their spouses. A business owner can create an account or even a separate company for the singular purpose of hiding assets during the divorce. Such actions are illegal and may result in criminal penalties if the spouse is caught.

Understanding Business

Your spouse has more knowledge than you about his or her business, but you can hire your own business assessor to prevent your spouse from deceiving you during your divorce. By you acting quickly on this, your spouse will have less time to hide assets or information related to the business. A DuPage County divorce attorney at Calabrese Associates, P.C., will help you determine the actual value of your spouse’s business. Schedule a consultation by calling 630-393-3111.


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