Forensic accountants’ investigations provide transparency that reduces uncertainty during divorce negotiations. This allows spouses to agree on a settlement with confidence that support payments are being calculated using accurate figures.
Determine if your soon-to-be ex is hiding assets by examining tax returns, bank accounts (including offshore), real estate records, insurance policies, job applications and other documents. They also conduct appraisals to establish the value of specific assets.
Business Valuation
In a divorce, forensic accountants are often needed to help classify assets as either separate or marital and determine their value. They also perform income determinations, which are important in determining support needs and helping spouses understand their overall financial picture.
In addition, a forensic accountant can help a couple decide on liquidation value or book value for their business interests. They can also review a company’s past and projected financial statements to assess the company’s performance and health.
Forensic accounting professionals can also identify hidden assets or inconsistencies within a client’s financial documents. In some cases, a spouse may attempt to hide certain assets or income to avoid property division. The forensic accountant can uncover these issues and ensure that both parties receive an equitable share of the marriage’s assets in the divorce.
Income Determination
Forensic accountants work to help spouses achieve financial transparency during divorce by locating hidden assets and income. They can examine a variety of financial documents including tax returns, real estate records, bank accounts, court documents, insurance policies, job applications and more to verify the accuracy of the numbers being used in divorce negotiations.
Spouses may also need to determine the proper amount of child support or spousal support payments and the tax consequences associated with dividing certain assets during a divorce. A forensic accountant can help identify and classify separate property from marital property, trace different assets to find their source, and value complex property. This information can be crucial to a successful outcome during divorce proceedings. Oftentimes, these tasks require extensive investigation and detailed analysis.
Lifestyle Analysis
A comprehensive lifestyle analysis is a critical component of a high-net worth divorce. This professional analysis reconstructs your financial lifestyle during marriage and can make a significant difference in your financial outcome at the negotiating table or in court.
A CDFA can perform an in-depth examination of your spouse’s spending habits by scrutinizing their bank and brokerage statements, tax returns and other financial documents for discrepancies and erratic patterns. This can reveal a hidden income source that will influence support calculations and help uncover assets concealed from the Court.
A lifestyle analysis is a more accurate and thorough representation of your expenses than a simple financial affidavit that typically only looks at your current financial circumstances. It also allows for a projection of your future expenses to guide alimony decisions.
Marital Balance Sheet Construction
When substantial monies are at stake, wealthy people often engage forensic accountants. However, anyone going through a divorce with complicated financial issues can benefit from their services.
They can help assemble a marital balance sheet that includes assets owned by the couple, including money in savings and checking accounts; investments; vehicles and equipment; principal residences, vacation homes and other real property; 401(k) accounts and other retirement savings; marketable securities; and even jewelry, furniture and art. They can also assist with determining income, which is important for calculating child or spousal support payments.
They can also perform appraisals, which are essential to ensuring that marital property is properly classified and valued during the property division process. They can review tax returns, bank records (especially off-shore accounts), employment contracts, titles and deeds and other documents to locate and determine the value of all assets.
Asset Tracing
A forensic accountant reviews all kinds of documents, including tax returns, accounting records, financial statements, bank and credit card statements, canceled checks, appointment books, sales invoices and other business documentation. These professionals are looking for ways that a spouse could be hiding assets in the course of the divorce process. They also help identify and classify assets as marital versus non-marital property, or commingled.
A forensic accountant can verify actual income in the course of a divorce, which is important for accurately calculating child and/or spousal support payments. They can also uncover hidden assets, such as those held through fake corporations or underreported income, and provide a valuation of businesses and professional practices to ensure that these are fairly divided in the divorce. They can even evaluate the tax consequences of property division and settlements.
