How a Forensic Accountant Can Help During a Divorce
Whether there is intense financial conflict or simply confusion, finances continue to remain the center of divorce proceedings for many couples. As a result, divorce attorneys and individuals seeking divorce often require a forensic accountant to fairly and expertly evaluate the couple’s finances, particularly if:
- Either spouse owns a business or is self-employed
- Either spouse entered into the marriage with significant separate assets or liabilities
- Either spouse will have more custody time with the children than the other
- The property to be divided is more than just a house and retirement funds
- The property is significant in value and neither spouse can agree on how to divide it
As financial experts with specialized skill sets in investigation, auditing, and accounting, forensic accountants are incredibly useful when it comes to helping achieve complete financial transparency in divorce proceedings.
Identify Joint Assets & Liabilities
Constructing a Marital Balance Sheet
When going through a divorce, it is incredibly important to ensure that the marital property is fairly and expertly evaluated before dividing it. Why? Because if one spouse fails to report certain assets, either intentionally or by mistake, it will significantly affect how the assets are divided and how settlements are decided.
If you need help determining whether an asset is marital or separate, or if an asset has been commingled, then a forensic accountant can investigate and review your accounts to determine which type of property it is. A forensic accountant will identify and report all joint assets and liabilities in a marital balance sheet to help ensure an equitable division of assets.
Assets could include: real estate, bank accounts, cars, investment accounts, retirement accounts, value of a business, employee benefits, and more. Liabilities could include: mortgages, credit card balances, personal loans, and more.
Appraise Assets, Businesses, and Properties
In order to fairly split assets among the parties, the actual values of businesses, properties, and other assets need to be professionally appraised. Forensic accounts will perform business valuations, appraise assets, and obtain appraisers for properties to determine accurate values of marital assets.
Locate Hidden Assets
Intentionally hiding assets has serious consequences, yet many individuals continue to attempt to conceal assets and prevent equitable division. Hiring a forensic accountant can help ensure that all hidden assets are accounted for.
In order to prove the other party is hiding assets, a forensic accountant with examine tax returns, financial statements, bank records, real estate records, insurance policies, and other important documents to uncover discrepancy in reporting. Forensic accounts are experts in financial document analysis and leave no stone unturned in their investigation. They can locate hidden income, hidden bank accounts, off-shore accounts, hidden property, hidden investments, cryptocurrency, and more.
Determine Child Support & Spousal Support
Forensic accountants perform professional income calculations that aid in the financial decisions (e.g. child support or alimony) being made as a result of divorce. For spouses that will likely pay or receive support, forensic accountants will create an accurate financial picture to ensure fair treatment. They will calculate cash flow using wages, interest, investments, dividends, and cash outflows from a business to develop a precise income. Consequently, an appropriate amount of child support or spousal support can be determined.
In addition to calculating the income for either or both of the parties, the forensic accountant may also conduct a lifestyle or marital spending analysis in order to determine appropriate amounts for alimony and/or child support. The forensic accountant will perform a detailed analysis of personal financial records, classify all expenses, and create an accurate picture of marital spending to establish how the parties lived.
Strategize the Division of Assets & Liabilities
A forensic accountant uncovers crucial financial information that affects how marital assets with be divided. As independent experts, forensic accountants will ensure that marital property is fairly evaluated and that all liabilities are accounted for. They will also work with you and your divorce attorney to strategize an equitable division of these assets and liabilities and provide valuable input on the settlement process.
In addition, how assets are divided in a divorce can have serious tax implications—a knowledgeable forensic accountant can help you understand and prepare for any potential liabilities.
Litigation Support Services
Should a settlement not be reached and the divorce goes to trial, the forensic accountant will act as an expert witness and provide expert witness testimony in court or at depositions. As expert witnesses, forensic accountants are essential in helping the court understand complex financial issues at heart of the case and clearly presenting an objective, professional opinion on the matter. In addition to presenting their conclusion and explaining their findings in court, forensic accountants can also:
- Assist in discovery and preparation for deposition or trial
- Help develop compelling opening arguments, direct examination, and cross examination
- Review and comment on the strengths and weaknesses of the opposing expert
Speak to an Expert
Having a forensic accountant help you and your legal team navigate a complicated financial situation is key to achieving the best possible outcome. The best time to contact a forensic accountant on a divorce matter? The earlier, the better.
If you would like to learn more about how Fact Finder Forensics can assist you or your client in a divorce matter, contact us today and book some time to speak with our experts.