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What should I know during a divorce that involves a business?

A family-owned business is a huge accomplishment for many people. If you and your spouse worked hard to build your business, you might be wary about having to divide up your hard work if you end up going through a divorce. There are many factors that you have to think about when you are going through a divorce that involves a business. One of these things is how the profitability of the business will impact the property division settlement.

How do I find out the true value of the business?

You can have the business valuated. This involves having a forensic accountant go through the records of the business to determine the actual value. This can also help to ward off the possibility of your ex fraudulently claiming that your ex didn't have any significant income for the business.

What is sudden income deficit syndrome?

Sudden income deficit syndrome (SIDS) occurs when your ex claims that the business suddenly isn't as profitable as it once was. The decline in the income usually comes right before the divorce filing or just shortly after the filing. This is typical if your ex was planning on filing the divorce for some time.

The issue with SIDS and not having a business valuated properly is that you might face not getting the settlement you should. If the business has more income or is worth more than your ex is letting on, the difference in the value wouldn't be factored into the property division settlement terms. You must ensure that you go into all proceedings regarding the property division ready to negotiate and with all information possible.

Source: Forbes, "If Your Husband Owns A Business, Watch Out For SIDS (Sudden Income Deficit Syndrome) Once Divorce Proceedings Start," Jeff, accessed March 30, 2017

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