Divorce Considerations When One Spouse is Self-Employed

All divorces in New Mexico come with their own set of challenges, but when one or both of the spouses involved is self-employed, it can be particularly perplexing. The spouse who is divorcing a self-employed partner may be concerned that the self-employed spouse is going to downplay their income and/or assets. On the other side of the fence, however, the self-employed spouse may be worried about protecting their business in the divorce.
Whatever your situation is, if you or your soon-to-be ex-spouse is self-employed, it’s crucial you know what to expect and how to protect yourself in the divorce.

Divorcing When You are Self-Employed

When you are self-employed, you need to go into the divorce process ready to defend all of your business assets. Division of property is tricky in any divorce, but it becomes even more challenging when self-employment is involved. It’s possible your spouse may say you make more income than you do, and that can jeopardize your fair share of the marital property. This can also change the way in which child and spousal support are handled, both of which have a significant impact on your finances over a longer term.
To protect your business and your finances as much as possible, you will need to start by getting as much information as you can in the form of documentation about your finances and business assets. The more documentation you have, the better off you will be, so leave no stone unturned. Next, hire a business accountant. A professional will be able to go through your accounts and evaluate your worth, and this is more likely to hold up in court than the estimated figures your spouse might present.

Divorcing a Self-Employed Spouse

Any person who is not in a typical W-2 work situation when it comes to income will have an easier time shielding assets during divorce proceedings. When your spouse is self-employed, she or he can hide the true value of his or her business to receive more in child and spousal support negotiations and the property division. To stop this from happening, you should do whatever you can to determine your spouse’s true income and finances.
If you and your spouse still have an amicable relationship, it is natural to not worry as much about financial deception as you might in a contentious divorce. Regardless of your situation, however, you should still examine your spouse’s finances to protect the future of your own.
When you are divorcing a self-employed spouse, the first thing you need to do is get as much financial information about him or her as you possibly can. This includes documentation about his or her income, properties, business and other assets. When your spouse is cooperative, this shouldn’t be difficult. If, however, your spouse won’t willingly give up this information, you will need to speak to your attorney, who will start a discovery process to get this information.
If necessary, hire a forensic accountant or business evaluation expert to look for any assets hidden by your spouse. If he or she is under-reporting income, moving around assets or shielding the true value of his or her business, it is a serious problem, and these types of professionals can search for the inconsistencies that signify something is not right.
Whether your spouse is self-employed or you are, it pays to work with a lawyer who is experienced dealing with this type of situation in a divorce. When it comes to finances in a divorce, the decisions made will have an impact on your own financial situation for years to come.