When one party is self-employed, it is often harder to assess their financial situation.
The reason why almost every person seeking a divorce hire a St. Louis divorce attorney is that these legal proceedings can be incredibly complicated. One way in which they often are is when one person is self-employed, either as a freelancer or a business owner. Under this condition, the financial situation of that party is often harder to assess and thus more difficult to creates divorce terms around. Here are a few reasons why.
Greater Ability to Hide Income
If your spouse has a typical job, then income is usually no mystery. That person will get a regular paycheck, and you can easily show how much money is coming in every month. In the case of a self-employed worker, this dynamic changes. The reason is that these workers report their income as a balance between revenue and costs. If they want to reduce the amount of money they make on paper, they can increase their costs by purchasing items or assets. Doing so can artificially deflate their income, a method they occasionally use to decrease spousal support.
Obtaining Documents is That Much More Important
No matter which side of the equation you are on, obtaining documents is crucial. Those that are divorcing a self-employed spouse must carry out this task because if they do not, they could end up with fewer benefits. The reverse is true as well, as a self-employed people’s spouses might overestimate how valuable their businesses are. The best way to avoid both of these traps is to collect financial documents that reflect the truth.
Plan Before You File
Most income hiding issues come after you file for divorce. The person who owns the business may then “cook the books” and change how it looks on paper. This is why you should make a plan before you go ahead with the divorce. A crucial piece of doing so is collecting financial documents before your spouse has a chance to alter them.
Be Ready For a Difference of Opinion on Value
Having a self-employed partner may lead to ambiguity regarding how valuable that business is. What often happens in a divorce is that one side will vastly overestimate that value, while the other will underestimate. This issue is one you’ll have to negotiate over with the help of your lawyer and a financial professional.
Hiring a Forensic Accountant
One of the best things you can do to ensure a fair process is hiring a forensic accountant. What this expert will do is delve into you or your spouse’s business assets and figure out precisely how valuable it is. Once this step is over, you and your lawyer can decide how you want to manage your case going forward.
Any family law attorney will tell you that self-employment complicates divorces. Fortunately, changing your strategy in a few crucial ways will protect you, no matter which side you’re on. The two most important actions to take are often collecting financial documents and bringing in a forensic accountant. After that, you and your attorney can handle your case with confidence.