I have had many divorce clients ask me, particularly when they are the breadwinner and facing alimony, whether or not they should reduce their income. “What if just happen to get demoted, or just happen to lose my job,” the W-2 earner asks. “What if I start to take on less clients,” asks the independent contractor. “What if I sell my business,” or “give big bonuses to my partners or employees this year,” or “happen to have less profit.” the business owner inquires.
My advice: don’t.
The Risks of “Divorce Planning”
Now, maybe you shouldn’t pull out all the stops right now to get a second job, if you were a W-2 earner, or to work 24-7 getting new clients if you’re an independent contractor, going above and beyond the status quo of the marriage, but when you start playing divorce games, they often come back to bite you. There is often no economic gain from the activity to make up for the income, revenue, or profit lost. In addition, it is often easy to see right through such actions. It is a mistake bordering on naivety to assume the other side, let alone their attorney and experts, have no knowledge. Not to mention Judges frown upon such games and will go out of their way to teach you a lesson.
Sanctions for Inappropriate Divorce Planning
Finally, such divorce planning, particularly when taken to an egregious level such as hiding assets (or attempting to hide assets) can lead to sanctions, contempt of court, or even criminal charges such as theft by deception (yes, you can be charged with theft in certain circumstances, even by your spouse or soon to be ex-spouse), or fraud. If you go under oath at any point in the process, you will also need to swear to the veracity of what you are saying. If you lie about your assets, then that could be considered criminal perjury. Aggressive attorneys may also argue that if you are committing illegal racketeering (“RICO”) if you and others in your business are playing games as to assets, ownership interest, or the like.
The bottom line: such activities are often too clever by half. In a divorce, you always want to appear as the most reasonable party before any judge. You also want to appear as the most honest. Given how much discretion judges have when it comes to credibility of witnesses, and how much power they have in determining how assets are split, you want to err well on the side of caution.
In the “pendente lite” phase of a divorce, which means the period of time after a divorce has been filed up until the time the divorce is finalized, which can take years, the parties are required to maintain the “status quo” of the marriage. It can take years to change a status quo. So long, that you would have to be truly committed to “divorce planning” to even make it work. Quitting your job or selling your company after divorce is filed would likely not alter the status quo, as courts have held that you will be required to continue with the marital lifestyle, including going into debt to do so, until such time as the divorce is finalized. If you sell a company immediately prior to the divorce, then the other side will argue it is part of inappropriate divorce planning.
Conclusion
In sum, it’s a no-win situation, and as a successful business owner, surely you do not play to lose. If you want to engage in such nonsense, you are welcome to continue reading this book, but please do not call my office as I will not want to work with you. Please, go find someone who will, but I am concerned for both of your future when the truth inevitably comes out, as it always does. I am not suggesting that you need to be an ‘Eagle Scout’ about things, and there is certainly time to be persuasive, strategic, and tactical, but what I am suggesting is that there are clear guidelines on how to act. Before you take any action, ask yourself whether you would do so were you guaranteed a judge would find out about it. Because more times than not, I am telling you they will.
And as you proceed through your case, should you move forward with my firm, then you are welcome to call me any time to discuss your strategies and gain further insight into what is and is not appropriate in your divorce.
Anyway, end of lecture, let’s move forward.
Partner with Carl Taylor, Esq.
Ready to Find Your Happily EVEN After? Call Today at 609-359-3345 to Schedule a Confidential Consult (or click here to self-schedule online) and Receive a Free Copy of the 3rd Edition of my 200+ page book, Happily EVEN After: The Guide to Divorce in New Jersey.
