Let’s assume that you and your spouse decide to file for divorce, and you want to separate as amicably as you possibly can. While sorting out your property and debts, you can’t help but suspect that your spouse is not being as forthcoming when it comes to all of his or her financial assets.
There may be some offshore accounts that you are not familiar with or some additional hidden assets that you do not know about. To help become as financially transparent in a divorce proceeding as possible, it would be in your best interest to hire a forensic accountant, preferably before the divorce proceeding begins.
What is forensic accounting?
Forensic accounting is a form of accounting that is used in a legal setting. A forensic accountant exercises investigative skills to look into an individual’s finances or the finances of a business. While forensic accountants can be hired to help with cases that involve business valuations, bankruptcy, and tax evasion, they can also help in divorce proceedings as well. Their responsibility is to audit complex financials and interpret the data for divorce proceedings. Forensic accountants can be employed by either party or their lawyers.
How can a forensic accountant help in a divorce?
Because finances are often a sore subject in divorce proceedings, a forensic accountant can be very beneficial for both parties. The forensic accountant can help to investigate any financial discrepancies in both personal and business finances, helping to reduce the divorce process from becoming lengthy and stressful. Some ways that forensic accountants assist in the divorce process are by identifying any joint assets and liabilities, appraising assets and businesses, locating hidden assets, and strategizing the division of assets and liabilities. Should the couple have any children, forensic accountants can also help to determine child support.
Establishing joint assets and liabilities
Many marriages operate in different ways. One spouse may be solely responsible for handling all financial obligations, which can put the other partner at a serious disadvantage. The spouse who has been solely responsible for financial matters may try to hide assets to receive a more beneficial settlement. To help identify all joint assets and liabilities and report them fairly, a forensic accountant can be used to help ensure that both parties receive an equitable division of assets.
Appraising assets and businesses
An appraisal is an unbiased professional opinion about the value of an item, from a business to a property. Forensic accountants have the ability to verify and explain financial data that is presented during an appraisal. This means that the forensic accountant can help to calculate the actual value of assets, businesses, and properties during a divorce to split the value equally between the two parties.
Searching for hidden assets and income
It is actually quite common for spouses to try to hide assets during a divorce. After all, the asset that remains hidden is the asset that will not be taken into account. This is where a forensic accountant will be the most beneficial. The forensic accountant will help to guarantee that all hidden assets are accounted for. To accomplish this role, forensic accountants will review various kinds of documentation – from tax returns to bank statements to credit card statements.
The other spouse’s spending habits may also come into the investigation. Any discrepancies between what the other spouse reported and what they actually have will be thoroughly examined. Forensic accountants are able to uncover under-reported income, fictitious debt, and so much more.
Strategizing the division of assets
A forensic accountant is very beneficial because of his or her ability to discover crucial financial information that impacts how a couple’s assets are ultimately divided. A forensic accountant can ensure that all assets named in marital property are fairly evaluated and all liabilities are properly accounted for. They work with a spouse or the spouse’s divorce lawyer to strategize how to equally divide the assets and liabilities for both parties.
Assisting with child support
For marriages that involve children, the issue of child custody and child support can add additional stress to a divorce proceeding. In matters of child support, it is common for the spouse with a higher income to under-report their income in order to diminish their child support obligations. Forensic accountants can help to establish the spouse’s actual income amount so child support payments can be calculated appropriately and fairly.
What types of documents are reviewed by forensic accountants?
During a divorce proceeding, a forensic accountant may need access to various types of documentation in both business and personal financial matters. The forensic accountant may be interested in any type of documentation that reveals financial information about the spouse, such as tax returns, financial statements, canceled checks, sales invoices, and business contracts.
Bank statements, financial projections, and mortgage applications can also be investigated by forensic accountants. Forensic accountants are skilled in searching for the existence of hidden assets that the spouse may not have been privy to for various reasons. For example, a forensic accountant may discover a utility payment from the spouse’s bank statement that was made to an address that the other spouse did not know about because the other spouse did not handle the financial affairs of the household.
Forensic accountants are not just used to prove malicious intent during a divorce proceeding. Forensic accountants are also able to find assets through these types of documentation that the other spouse may have simply forgotten about or did not keep records of.
Are you planning to file for divorce? If so, you should consult with an experienced divorce attorney from McCabe & Russell, PA. We can help you through the entire process, secure a forensic accountant for your case, and ensure that your rights are protected along the way. Call our office at 443-917-3347 or complete a contact form today. We have offices in Fulton, Bethesda, Rockville, and Columbia to better serve our clients.