Less than scrupulous spouses can use their businesses to hide assets when a divorce occurs. Hidden assets can always pose problems when a judge is deciding how to divide your and your spouse’s property, but when a family-owned business is involved, there are ample, easy opportunities for a spouse to hide or mischaracterize assets, a portion of which should properly go to you.
Using a business to hide assets
Here are a few of the ways in which spouses have gotten into trouble when they have hid assets via a business:
- Using the business to pay family members or close friends prior to a divorce with the family member or friend then returning that money promptly after the divorce
- Sending paychecks to fake employees to make the business’s assets appear to be less than they are
- Putting off business deals until after a divorce to delay the resulting increase in value
- Opening an account in a child’s name and then moving money there
Properly valuing the business
Determining what to do with a business at divorce time is another way that a spouse can be cheated out of a proper division of the couple’s assets. Valuing a company is always difficult, even for the largest, publicly traded companies. For smaller, family-owned, private companies, valuation requires multiple methods. Always consult with an attorney and other experts if you are divorcing and a family business is involved so that you can arrive at a fair valuation.
Have you been involved in a divorce where a family business was used to hide assets? How did you uncover the fraud?
John K. Grubb & Associates, P.C. – Houston divorce lawyers