While determining child support may appear to be rather straight-forward, challenges often arise when one spouse tries to disguise what their true earnings are when they receive benefits other than just a regular paycheck. If you have a self-employed spouse, not only might you consider retaining the services of a forensic accountant, but insist that your attorney does a thorough job with discovery in an effort to arrive at a fair and equitable support order.
As an example, here are five ways that income can pass "under the radar":
1. Your spouse may set-up a "straw" employee such that money is paid to a non-existent employee. It is not uncommon for such checks to be voided after the divorce or modification matter is resolved. Our attorneys often take the deposition of the payroll supervisor in order to lock in their story.
2. In order to show high expenses, and low(er) profits, your spouse may show money paid from the business to someone close - such as a father, mother, girlfriend or boyfriend - for services never rendered. In such cases, the money is returned to the party after the divorce is final.
3. Some spouses delay in signing long-term business contracts until after the contested divorce or modification matter goes to judgment. Although this may appear to be smart planning, the intent is to lower the value of the support order. As such, this practice is considered hiding assets and income and looked down upon by the court.
4. In some cases, the expenses listed on a spouse's financial statement are considerably higher than the reported income would support. In this case, the court would welcome a detailed analysis of personal lifestyle, spending patterns and cash flow in order to assist the judge in arriving at an equitable support obligation. Think about it: there are all aspects of compensation to determine actual income including travel, meal and auto allowances; bonuses; retirement contributions; commissions; insurance and payment of personal expenses, etc.
5. If your spouse is in a business or industry where there is considerable variation in income due to seasonal employment, overtime, second jobs, bonuses, or profit sharing, etc. you're well-advised to taking a two- or three-year average over a consistent period when such variation exists.
If you find yourself confused about how to address the issue of support with a self-employed spouse, contact us for no-obligation at (800) 910-DIVORCE.
When divorce begins, it's quite common for the husband or wife of a business owner to feel vulnerable. After all, if they've been left out of the loop, they have no true understanding of the finances of the business. Moreover, they fear their spouse will hide assets, or even follow-through on their threats or tricks to leave their partner with no part of what is, most likely, one of the largest assets in the parties' joint marital estate.
For starters, consider these two pieces of advice: first, don't listen to your spouse. Instead, when you want to know what will happen on your day in court, do some reading of your own. Secondly, do more research on family-owned business problems in divorce.
What follows is the overview of what you should be focusing on:
1. When two parties divorce, and one has a business ownership interest, one spouse wants the business to be as big as Warren Buffet's empire, and the other wants it to look like the business is going under (I refer to this as "RAIDS" - Recently Acquired Income Deficiency Syndrome).
2. The problem is that business owners have many options to hide money or control the finances and how they are written up on tax returns.
3. Our attorneys most commonly start the discovery process by sending a request for production of documents. Along with the help from our business valuation experts, we look for: phantom employees that don't exist, business property leased from unknown people or corporate entities, an unusual imbalance between earnings and assets, and improper personal expenses flowing through the business.
Business owners have real opportunities when it comes to divorce. At the same time, many spouses go without rightful property division, child support and alimony because they don't have the energy or know-how to discover the truth. You owe it to yourself - and to your children - and our attorneys encourage you to contact us for a no-obligation consultation.
Finalizing a divorce involves many decisions, including "Who gets the house?" There are generally two options regarding the house. First, it can be sold and the proceeds divided, or the other alternative is that one party can "buy out" the other. In either case, one or both parties should order an appraisal of the residence. Divorce appraisals require a well supported, professional appraisal that is defensible in court. When you order an appraisal from an appraiser, you want a reasonable assessment as to the value of your home for purposes of making an equitable distribution of the marital estate.
Lawyers and Judges rely on these assessment values when calculating real property values for estates, divorces, or other disputes requiring a value being placed on real property.
What's important to note is how, oftentimes, the divorce date differs from the date you order the appraisal. Most appraisers are familiar with the procedures and requirements necessary to perform a retroactive appraisal with an effective date and Fair Market Value estimate matching the date of divorce.
When you're interested in knowing the true value of your home in order to receive an equitable division of the marital estate, contact us.
Once a Guardian Ad Litem has been assigned to your case, find out in advance what the evaluator's procedures will be so that you can prepare yourself emotionally as well as with any collateral information you wish to introduce into the evaluation. An example of such information is a list of people with whom you'd like the evaluator to speak. Once you know what to expect, you will be more comfortable with the process. Generally, evaluations will consist of some combination of the following:
- Meeting with each parent and each child alone to learn family history, individual developmental histories, concerns, and desires for the outcome of the dispute, strengths and weaknesses and how each parent thinks about the child individually.
- Observing parent and child interactions to ascertain their relationship. The evaluator often makes observations in each home so that the child is comfortable and the situation is as realistic as can be given the anxiety-filled circumstances.
- Speaking with others who know the parties, especially the children.
- Psychological assessment using standardized and open-ended questionnaires.
- Assessing extended family and community networks of family members through discussion with family members, community sources and/or observation.
The methods used in an evaluation are designed to provide the Court with information it needs to determine a child's best interests when the parents cannot make the decisions for themselves. The concept of child custody evolved over the years from a presumption in favor of fathers to one in favor of mothers throughout the 1800's, with the term "Best Interests of the Child" introduced in 1881. In response to changing social conditions that have brought more parity in social roles between men and women, gender is no longer viewed as the basis for deciding child custody.
Judges now give different weight to several factors that have been delineated as important. The Court will consider any and all of the following factors: the quality of the emotional ties between each parent and child, the capacity of each parent to love, educate, guide and raise the child; the capacity of each parent to provide food, clothes and medical care; each parent's special abilities and particular disabilities, the psychological functioning and developmental needs of the child, whether you're dealing with an angry child, the child's need for stability and continuity with regard to past living conditions, the parent's values regarding parenting, the potential for inappropriate behavior or misconduct that might negatively influence a child, a parent's capacity to encourage the other parent's relationship with the child and the wishes of the child when the child is of sufficient age to articulate a well-reasoned preference.
Whenever a child is involved in a family law court case, it is common for everybody to be represented by an attorney except for the child. The Guardian Ad Litem (GAL) is a person appointed by the court to represent the child in court and to make specific recommendations to the court regarding the best interests of the child. The role of GAL is not exactly the same as being an attorney for the child. The GAL has to consider the child's wishes, but also is required to make an independent judgment of what is in the best interest of the child, even if that is not what the child wants.
Generally, the GAL has a duty to familiarize himself or herself with the case prior to the trial or hearing; to find out the child's wishes by meeting with the child (or by meeting with others involved in the case if the child is too young to express wishes); to gather information and arrange the presence of necessary witnesses for the hearing; to represent the child in court at the hearing, and to advise the Court as to the child's wishes and the GAL's recommendations (if asked for).
As attorneys, we're frequently asked what the GAL tends to look for. Here's a list of what we've been told is the beginning of their checklist:
Children who are acting out or withdraw, refusing to go to school, caretaking and filling adult roles, constantly seeking attention (often labeled as ADHD), bedwetting, nightmares, difficult to set limits, hitting adults, regressing...those who are full of guilt, shame, fear, anger, confusion, grief, insecurity, etc.
On a social note, GALs often look for those children who have patterns of isolation, those who are overly social, have difficult in trusting others, poor conflict resolution skills, may be passive or bullying with playmates, or those with poor images or anything that is stereotypically female.
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