Money is a significant source of conflict and stress in many divorces. Among the issues that have to be decided in divorce are how to divide marital property and debt and what should to be paid for spousal and child support. A forensic accountant can help by utilizing accounting and investigative techniques to examine the finances of both parties. By analyzing individual and business records, the forensic accountant can provide evidence supporting or refuting a party’s claim for property or support. While forensic accountants can assist in any matter, there are two common scenarios where they are most likely to be used.
The first situation is when one spouse is suspicious about the other spouse’s finances. It could be the spouse thinks money is being hidden or funneled to an unknown account. Alternatively, one spouse could be spending money improperly and then claiming he or she cannot afford to pay support. Often, the spouse suspected of withholding information has his or her own business or investments, is a 1099 worker, and/or has cash receipts. A forensic accountant can trace the spouse’s personal and business income and audit expenses in order to uncover possible fraud or other questionable activity. When necessary, forensic accountants can be employed as expert witnesses in litigation to testify regarding the evidence they found.
Forensic accountants are also often used when parties want to negotiate a settlement, particularly during mediation. They can determine each spouse’s current and future financial needs, make the necessary calculations for spousal and child support, and assist in preparing a settlement offer. Where the parties have difficult to value assets or business interests, the forensic accountant can also appraise the assets. In addition, he or she can model the tax impact of competing settlement offers to aid the parties in coming to an agreement.
In the divorce context, forensic accountants can provide invaluable assistance by enabling the parties to make well-informed decisions and avoid unnecessary litigation over financial matters.
If you are considering divorce, contact us to discuss how we can help you achieve the best result in your matter.