Divorce and Self-Employment: What You Need to Know
Every divorce will come with its challenges, but when one or both spouses are self-employed, these challenges may become particularly problematic. For the spouse who is divorcing their self-employed partner, the biggest concern is that he or she may try to downplay the full amount of his or her assets. On the other hand, individuals who are self-employed should be prepared to protect their business from their soon-to-be ex-spouse.
In any case, if you or your spouse are self-employed and you are seeking a divorce, it is essential that you know what to expect and how to protect yourself.
Divorce as a Self-Employed Party
If you are self-employed, you need to enter into the divorce process prepared to defend your business assets. While the division of property is a tricky subject in any divorce, it can be more challenging when one or both parties are self-employed. It is possible your spouse may try to claim that you earn more than you do, which could potentially jeopardize your fair share of the shared marital property. It could also alter the way in which spousal support and child support are handled, which could significantly impact your financial situation.
To protect your finances and your business, try implementing these divorce tips:
- Gather as much documentation as you can in regards to your business assets and financial situation. The more information you have, the better.
- Hire an accountant. A hired professional can sift through your business accounts to evaluate your worth, which is far more likely to hold up in court than any estimated figures your spouse may present.
Divorcing Your Self-Employed Spouse
Anyone who does not subscribe to a typical work situation as a W-2 employee will typically have an easier time hiding assets in a divorce. If your spouse is self-employed, he or she can potentially hide the actual value of their company to receive more in property division, spousal support, and child support negotiations. To prevent this from happening, you should do what you can to determine your spouse’s real income and financial situation.
If you and your spouse are lucky enough to share an amicable relationship, you are probably less likely to worry about any financial deception, whereas individuals involved in a contentious divorce might be more concerned. In any situation, no matter how much you trust your spouse’s integrity, it is essential that you examine their finances to protect your financial future.
When seeking a divorce from a self-employed spouse, try following these tips:
- Obtain as much financial information as possible, including any documentation about his or her business, income, properties, and other assets. If your spouse is cooperative, this should be easy enough. However, if your spouse does not willingly give you the information you are legally entitled to, you may need a formal written discovery to obtain the information you require.
- Work with a business evaluator or forensic accountant to find your spouse’s hidden assets. If your spouse is underreporting his or her income, relocating assets, or hiding the actual value of a business, you have a problem. A forensic accountant can search for any inconsistencies and find any evidence of wrongdoing.
Whichever side of the line you stand on, whether you are self-employed or your spouse is, you should work with an experienced lawyer who is familiar with your type of situation.
Contact McKinley Irvin for help with your Washington divorce case.