Divorcing When One or Both Spouses are Self-Employed

 Posted on June 26, 2018 in Divorce

Divorce is complicated as is, but when you throw in two people who are self-employed, it becomes even more so. With a self-employed individual, it can be difficult to discern just how much he or she really makes each year. Moreover, it can be easy for a self-employed individual to hide assets, or at least downplay earnings.

On the other hand, the individual who is self-employed may be concerned about what will become of his or her business post-divorce. The business owner needs to take measures to safeguard his or her business, no matter how lucrative it actually is.

If you, your spouse, or both of you are self-employed and you are seeking a divorce, it is imperative that you know what to expect from the process and that you take measures to protect yourself and your interests in either your own business or the other party's business.

When You are the Self-Employed Party

If you are the person in your relationship who owns and operates a business, you need to be prepared for the real possibility that your spouse will try to go after your business assets. Property division is already a touchy subject in Texas divorces, but it can become even more so when one's livelihood is involved.

Hopefully, you and your spouse are able to part on decent terms and can agree to split your assets in a way that does not involve doling out your business assets. However, if you and your spouse are not on good terms, he or she may try to claim that you earn more than him or her, and therefore, cheat you out of marital property, or worse-cheat you out of your rightful share in the business.

That said, you can protect your finances and your business with a two key tips:

• Gather as much documentation as you can that has to deal with your business's finances and assets. The more information you have, the better.
• Hire a financial advisor to help you sift through your business accounts and evaluate your business's worth. An accountant's estimates are more likely to hold up in court than your own or your spouse's.

When You are Divorcing the Self-Employed Party

When a person does not have to file a W-2 to report income, it can be fairly easy to hide assets. That said, you understand your spouse's financial situation better than most, as he or she may have used the business's income to pay the monthly mortgage, fund extravagant vacations, and purchase new vehicles.

If, all of a sudden, your spouse is not making any money, and if he or she reports an income that is far less than what he or she was making, mention it to your divorce lawyer. A substantial decrease in income is a red flag that assets are being hidden. If it is discovered that your spouse is trying to hide assets via the company, it could come back to haunt him or her come property division time.

However, if you and your spouse are lucky enough to have an amicable relationship, you may not be all that worried about financial deception.

That said, no divorce is perfect, and there is bound to be some level of privacy. Even if your spouse does not mean to deceive you, you may miss out on your fair share of property if you do not take steps to protect yourself.

Some steps you can take to protect your financial interests and your future include:

• Obtain as much information on your spouse's assets and finances as possible while you still have access to it.
• Work with a business evaluator to get an accurate assessment of what your spouse's business is really worth.

Consult With an Experienced Lawyer

At Clark Law Group, we have successfully helped hundreds of clients through the complexities of divorce. If you want to ensure that you walk away from your divorce with your financial interests still intact, reach out to our team today.

Contact us now to schedule a consultation!