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Is Sudden Income Deficit Syndrome Affecting Your Divorce?

On Behalf of | Nov 10, 2022 | Divorce |

You just can’t seem to catch a break. Just as your marriage started to experience problems, your spouse’s business also had a series of upsets, and your income has been declining.

Is that a coincidence? Maybe. It could also be a symptom of sudden income deficit syndrome (SIDS). When a spouse who operates a closely held business catches wind of the fact that their marriage is on the rocks, they sometimes try to protect themselves financially through less-than-honest means. That can include purposefully making it seem like the family business is failing.

How Do You Spot The Signs Of SIDS?

While the downturns in your fortunes could be purely coincidental, it’s always wisest to suspect SIDS when your marriage is in trouble and your spouse’s once-profitable business suddenly starts losing money. Far too often, that’s an attempt to avoid fairly sharing the marital assets in a divorce.

The less involved you are in the business operations, the more likely SIDS will occur. Money can be moved around on paper in all different ways, but some of the most common tactics a business owner may use to hide their assets include:

  • Overpaying debts or taxes (so that they can create a temporary deficit and get a refund later)
  • Hiding the cash transactions (and the cash) and only reporting income that has a paper trail
  • Creating fake vendor accounts or fictional employees so that they can divert money that way and keep it hidden
  • Making small or large “loans” to their friends and relatives (who are actually being enlisted just to hold onto the cash until after the divorce is over)
  • Simply altering the books (or keeping two sets) so that it looks like there’s a gradual decline in the company’s prosperity

If you suspect SIDS is at play in your divorce, you cannot trust your spouse to be forthcoming about the business financials. It may be necessary to involve the court to get the financial data you need to understand your rights, and a forensic accountant may have to be involved.

When you’re involved in a high asset divorce, protecting your future can be difficult. Make sure that you have the appropriate legal guidance from the very start.