Sudden Income Deficit Syndrome and Divorce

Man working on paperwork with Scales of Justice on desk

Many things happen when a person files for a divorce. For people who have a family business, keeping an eye on what is going on with it is beneficial. Sometimes, one party will start to tamper with the profits of the business to make it look like it isn't as profitable as it really is. This is known as sudden income deficit syndrome.

Some people claim that this a form of self-protection. However, it isn't legal to try to hide any assets, including the income of a family-owned business. This doesn't stop some individuals from trying. For this reason, you should pay close attention to the claims the other side is making about business matters.

Not Always Sudden

One thing that anyone who is going through a divorce must remember is that the changes in the family business' income might not be as sudden as the name implies. It is possible that a person might start to deflect money away from the company long before the divorce is filed. This is usually when they know the marriage is ending and want to hang on to as big a share of the assets as possible.

When the decline in the company income is subtle, you might not think anything of it. You might even think it is the normal ebb and flow of the industry. The truth of the matter is that any decrease in income in the period prior to the divorce filing must be investigated.

Spotting This Phenomenon

The company's records can sometimes show that one party is being dishonest. Hiring a forensic accountant is one way that you might unearth this type of situation. This professional can review the transactions and records of the business to see if there is anything amiss. Clues can come in the form of public records, business records, and other similar documentation.

One factor to look at in these cases is where the money might be going. False payroll accounts, not recording cash payments and diverting money into fraudulent accounts are all some ways that this might happen. The person may write invoices from a sham company and pay those to make it appear as though they are paying for goods or services when, in truth, they are paying themselves.

You can't get the settlement in your divorce that you deserve if you are a victim of sudden income deficit syndrome. Proving that this is happening and ensuring you get what's rightfully yours is imperative.

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