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Watch out for fake expenses during divorce

Your spouse owns a business. You're going to get divorced, and so you're trying to get a sense of what he or she holds in assets, in order to get your fair share.

While it's illegal to hide assets, people do sometime come up with very creative ways to try to stash them away. Since your spouse is a business owner, one thing you want to watch out for is the sudden rise of fake expenses that are designed to drain him or her of assets right before the split.

For instance, your spouse could decide to pay a number of vendors in advance, perhaps paying for orders that will be made in the next months or even years. There's no reason not to wait except that it makes it look like the bank account contains far less than it should.

Another way to create these fake expenses is to "pay" family members and friends for services that they're not providing. For instance, your spouse could add a brother and two cousins onto the payroll as "consultants" and then pay them in advance for a two-year contract. This could pull $500,000 out of the company or your spouse's personal accounts, but, if those people are in on it, they may terminate the contracts and return the money shortly after the divorce.

This isn't to say that there aren't legitimate business expenses, but just to help show that they may not all be as fair as they should be. If you think your spouse is hiding assets, make sure you know your legal rights.

Source: AOL, "10 Easy Ways to Hide Assets From Your Spouse," Robert Pagliarini, accessed Aug. 01, 2017

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  • Kentucky Justice Association
  • Kentucky Bar Association 1871 Lex Ordo Justicia
  • United States District Court Western District Of Kentucky
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