If you are getting a divorce and your spouse has a closely held business that receives a significant amount of revenues in cash, you should be concerned about cash taken out of the business that is not reported. What can be done to account for this missing income, especially if your spouse is less than co-operative in revealing this information?
Here are some points to think about:
The key is to get a business valuation expert who is experienced with these types of cases, doesn't mind rolling up his/her sleeves, and has experience in forensic accounting. Also keep in mind that the cost of this type of assignment is usually much greater than just a straight-forward business valuation.This means you need to budget for this additional cost, and you need to do a realistic assessment of the cost versus the anticipated benefit.This can sometimes be difficult, as you may not know the extent of the unreported income (if any) until your forensic analysis is well under way. My advice is to plan the investigative process in phases so that you, your attorney and forensic / valuation expert can meet to review the preliminary findings and discuss the direction and extent of future work.
Being involved in your case is very important, especially if you have previously been involved with the business and are familiar with its operations and procedures. Even if you have not been involved in the business operations, it is important for your valuation expert to gain an understanding of how you lived and socialized during the marriage, as this information can be used to determine if the reported income is reasonable. For example, if your spouse alleges that he or she only receives $100,000 per year from the business, but your life style requires $350,000 per year to support, this would raise the possibility of unreported cash income, absent any other sources of funds.
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For more information, contact the Family Law Offices of Renee M. Marcelle at (415) 456-4444, or online at http://www.familylawmarin.com/--