Portrait of John K Grubb

Texas Divorce and Prenuptial Agreement

4600 Post Oak Place, Suite 301 • Houston, Texas 77027-9705

Phone: 713-877-8800 • Fax: 713-877-1229

Small Businesses Provide Chances to Hide Assets

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

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