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'Sudden Income Deficit Syndrome' and divorce: What to know

Could "Sudden Income Deficit Syndrome," be a factor in your divorce?

Sudden Income Deficit Syndrome is an affliction that only seems to affect businesses whose owners are going through a divorce. It's particularly common among sole proprietorships.

The symptoms can be hard to spot because -- by all outward appearances -- the business owner or self-employed individual seems to have plenty of work and plenty of money. However, the spouses of those business owners are told that the once-thriving business is "struggling" or that there's been trouble in the market. Despite the fact that the self-employed business owner seems to be able to keep up his or her usual lifestyle, there's suddenly no extra money around to pay support to his or her spouse.

Pleading sudden poverty in order to avoid paying a fair amount of spousal support is a common tactic for business owners and the self-employed. Just recently, the former mayor of New York City, Rudy Giuliani, was accused of doing just this. Giuliani claimed that his income had dropped by nearly half -- from the $9 million he earned in 2017 to less than $5 million just a year later in 2018. His estranged wife, through her attorneys, is questioning the veracity of his claims, noting that her high-profile husband's personal expenditures certainly haven't changed. For example, he spent $7,131 on pens in just six months and $286,000 for expenses incurred by his mistress in a five-month period -- yet he claims he's unable to afford the $63,000 monthly spousal support his wife is asking.

Divorces generally have a way of bringing out the worst in people, especially where money is concerned. Business owners are often quick to adopt a "financially-protective stance" when divorce is on the horizon -- especially when their spouses aren't deeply involved in the business or are less financially savvy.

If your spouse's financial troubles with his or her business started at the same time your marriage began to crumble, you have a right to be suspicious that you aren't hearing the truth. In fact, you need to be suspicious.

Talk to your divorce attorney about your concerns. A forensic accountant might be just the right "medicine" for your spouse's business woes -- and the best way to protect your rights.

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