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In Divorce And Other Family Law Matters

What is sudden income deficit syndrome?

On Behalf of | Sep 22, 2023 | High-Asset Divorce |

Divorce is never easy, especially when a family business is involved. Financial transparency becomes even more critical as both parties need to understand the value of assets for equitable distribution. A tricky issue that often arises in such situations is “sudden income deficit syndrome,” or SIDS. 

This syndrome typically affects the spouse with higher income or control over the family business. They suddenly report a significant decrease in personal income or declare that the company has suddenly become less profitable.

Why is SIDS a serious issue?

SIDS can significantly impact divorce negotiations and settlements, complicating issues such as alimony, child support and the division of business assets. In many cases, the spouse who claims this sudden drop in income uses it as leverage during settlement discussions, arguing they can’t afford to maintain the same level of financial support or that the family business is less valuable than previously stated.

Be skeptical and consider professional help

If you face a SIDS situation, it’s crucial to approach it with skepticism. This is the time to bring in financial professionals who can closely examine the business and personal financial records. Forensic accountants specialize in examining and interpreting complicated financial statements, so they can offer a more accurate picture of the actual situation. They will scrutinize financial records to discern if the reported decrease in income is genuine or if it’s an attempt to manipulate the divorce proceedings.

Protect your rights and your future

Addressing SIDS is not just about the immediate impact on your divorce settlement. It also safeguards your future financial well-being. By taking the issue seriously and seeking knowledgeable assistance, you’ll be better equipped to negotiate a fair settlement and protect your interests for the long term.