Investigating a Spouse’s Business During Divorce

Richmond divorce attorneyIf your spouse owns a business, he or she may attempt to use it to hide assets from you. An experienced attorney will thoroughly investigate the business to uncover any unusual transactions that may affect the marital estate.


Closely Held Businesses

If your spouse operates a business, then your attorney will have the difficult task of finding out whether he or she is using the business to keep assets from you. Your attorney will consider the function of the business’ size, control, and source to determine if your spouse is misrepresenting transactions that significantly affect the marital estate as normal large business transactions. Things to keep in mind:

1. Business owners who run every aspect of the business can thwart internal controls and usual bookkeeping procedures. 

2. Tracing the money earned by the business may lead to any hidden assets. It’s no secret that a business can create a substantial amount of income for a couple.

Thus, any business controlled exclusively by the spouse involved in a divorce should be a natural target of skepticism or investigation by an attorney or an investigator. If the spouse is minority shareholder or had minimal control over the business operations, then he or she will be treated as an employee during the investigation. 

 

Necessary Documents

To conduct a business investigation, your divorce lawyer will require the bank statement and check registers, which are the same documents required for an investigation of a single wage earner. But for a business investigation, such documents for both the couple’s personal account and business account are required.

Investigating the business account will involve review of the following:

1. Amount of money coming into the business
2. Interbank transfers
3. Unusual bank transfers

For check registers, he will review:

1. Payments made to or on behalf of the business owner
2. Substantial or unusual transactions
3. Non-business expenditures

The objective here is no different from other investigation for hidden assets, which is to discover any of the spouse’s undisclosed possession or assets (including income). 



Answering Questions About Your Business

Your attorney will prepare you or your spouse to answer questions about unusual transactions.  If you are a business owner, you should be ready to answer questions regarding any unusual transactions in the bank statements and check register. If your spouse is the business owner, then you will be asked to review the bank statement and check register, even if you had no control of the business during the marriage.

The review process may reveal payments to a wide range of recipients, such as relatives, retailers, girlfriend (or boyfriend), questionable vendors or unknown credit cards. If you fail to obtain relevant evidence, you can still use the review to learn about how much the business makes and how it spends the money, and form an informed decision on whether you should continue to seek hidden assets.