For most couples, divorce involves a pretty basic division of assets—marital home, bank accounts, retirement accounts, cars, and personal property. But for some high-income couples, especially those who own businesses and/or who work or are interested in investments like stocks, real estate, trusts, collections, and partnerships, any of which can create a very complicated financial situation when it comes to identifying the value of assets and figuring out how to divide them. If your family has a complicated investment and/or income portfolio and/or has a spouse who is secretive about money, hiring this kind of forensic expert to locate, identify, and value assets can be critical in ensuring you get your fair share in the divorce.
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What is a Forensic Accountant?
A forensic accountant is a professional who specializes in locating, identifying, and valuing assets in a divorce to assist with the allocation and division of assets between the parties. For many wealthy couples, it can be difficult to identify all of their assets’ values, especially when the items are rare or one-of-a-kind, like artwork, or owned as part of a partnership. For those kinds of unique assets, a specialized evaluation may be needed to determine and appraise their value. A forensic accountant can also review financial records to help identify actual income and value in a business, as well as any inappropriate spending, hidden assets, and the like.
What Does a Forensic Accountant Look At?
A forensic accountant will review documents and records in order to identify the marital assets that need to be divided between the parties. Using a forensic accountant has become more popular and necessary in high-income divorces where the parties own, or are invested in, high-worth assets. With some items like artwork, furniture, and other luxury personal property, your divorce lawyer will not be able to determine the value of those assets. With other assets like ownership of a business, the accountant will need to look at the business’s income and spending to evaluate its value and what is owned by the parties. For complicated appraisals and evaluations like these, a spouse will need the assistance of a specialized expert who is experienced with identifying and valuing a multitude of assets.
What If Your Spouse is Hiding Money?
One of the most important things a forensic accountant can do is to locate and identify assets that your spouse may be trying to hide. This can include finding hidden banking accounts or other property, but it can also be about identifying their true income if they are anything other than a W-2 employee. Many self-employed people with authority over their salary may be paying themselves a lower salary to show a lower income. Likewise, people often hide (or try to hide) personal spending through this business to make their income or assets appear lower. A forensic accountant can go through the business’ payroll, income, expenses, tax returns, and other documents to give an accurate picture of not only what the business is worth but also what the entire business is valued at. Knowing your spouses’ actual income and assets is critical to being able to equitably divide assets as well as set maintenance amounts.
Can My Forensic Accountant Testify as an Expert Witness in Court?
A forensic accountant can serve as an expert witness at a hearing or trial and can testify to their findings and opinions. Your accountant can create exhibits that can be used to show the valuation process and uncover any hidden assets or income to provide that information to the judge. It is critical when using an expert witness that the name and pedigree of the witness is properly and timely disclosed to your spouse and their attorneys, along with their resume. It is also important for you to know that they have the right to question your expert in a deposition and at trial. Your attorneys will also need to be able to show that your expert is an expert both in their field and your case, so it is critical to be careful when selecting a forensic accountant to participate in your case. You can also explore whether an expert could be appointed by agreement, eliminating the need to have them qualified and simplifying the process because you will both agree to their findings.
It is also important to know that a forensic accountant is an expensive investment for their investigation and to have them testify, if necessary, but it can be an important investment towards ensuring an honest accounting of your incomes and assets and an equitable division of those assets to ensure that you get everything you are entitled to in your divorce.
