Owning a business can come with many perks. For those who are interested in protecting only their own financial interests during a divorce, some of these perks might be manipulated into tools to hide assets from a future ex.
How can a business be used to hide assets during divorce? The financial experts with Forbes recently tackled this issue, noting two of the more common ways a spouse could attempt to achieve this goal include:
- Not taking a paycheck. In some cases, a business owner can claim that he or she has no income by simply not taking a paycheck from his business. Instead, the business owner could be using the business to cover "personal expenses."
- Double whammy - personal expenses also decrease business value. If this method is used, the personal expenses can also result in reduction of the business' value.
Fortunately, there are steps that can be taken to help reduce the likelihood that such attempts to hide assets during divorce will be successful.
How can I protect my right to a fair split in divorce? If possible, it is wise to get documents from third parties. Instead of just getting information about the business drafted from the business owner/spouse, request documentation like bank statements, credit card bills and the like.
If these documents are not provided, gather as much information as possible to establish that the numbers provided by the business owner/spouse are in conflict with the lifestyle that the couple enjoyed during marriage. This may help to show the court that the business owner is not being completely honest.
What does this mean for divorces in Michigan? Those who are beginning or considering a divorce are likely aware of the fact that these proceedings are governed by state law. In Michigan, state law requires courts determine a division of property that is "fair."
This does not always translate to equal.
As such, it is imperative that those going through a divorce get a proper business valuation before moving forward with the property division portion of the divorce. It is next to impossible to get a fair split of assets without an accurate estimate of the business' worth.
One way to help better ensure that your interests are protected is to hire experienced legal counsel. Your attorney will advocate for your rights during the divorce proceeding, better ensuring that final split is truly fair.