(150+)Spouses with high net worth often find themselves bitterly disagreeing over the extent and value of property as well as the amount of money that should be paid in alimony and child support. However, without evidence that the other spouse is hiding income or property or engaging in inappropriate financial behavior, it can be difficult to present a case for a fairer equitable distribution or higher support payments. It is recommended that these spouses retain the services of both a forensic accountant and a divorce lawyer who is experienced with high-asset divorces. Greenville, SC lawyer Angela Frazier is ready to assist you.
Forensic Accounting in Divorce
A forensic accountant specializes in researching complicated financial activities to trace money and other property disputed during a divorce. When high-net-worth spouses begin divorce proceedings, there is often disagreement and outright suspicion concerning the value of assets and how much income the other party earns. More specifically, husbands and wives frequently allege that their spouses are:
- Hiding income, sources of income, and money (cash)
- Withdrawing money from bank accounts without the other’s knowledge or consent
- Liquidating retirement, stocks, and other assets
- Moving money and assets to attempt to hide them
- Committing financial or tax fraud
- Misrepresenting the value of assets, including family businesses
To ensure a fair divorce, the forensic accountant leverages his or her skill to expose and unravel this complex web of transactions and activity, reveal discrepancies and misrepresentations, and determine the true value of the most disputed financial interests in the divorce.
Identifying and Valuing Assets
Spouses in a high-asset divorce who know that separation and litigation are imminent may attempt to hide assets or undervalue it to benefit unfairly during the equitable distribution portion of the divorce. Some spouses essentially lead separate lives in which they have acquired substantial assets and pieces of property, including real and personal property, without their partner knowing. In other cases, a spouse may suspect something is amiss but be unable to prove it.
The forensic account will work to identify hidden assets such as offshore bank accounts, undisclosed investments and business interests, and real or personal property. This is usually accomplished by detailed review and analysis of financial and business records, bank accounts, tax returns, and more.
Analyzing Financial Statements and Transactions
Much of what a forensic accountant does begins with acquiring a potentially significant amount of financial documents so they can point out suspicious transactions and begin tracing money and property. To that end, the accountant will seek access to the following records, among others:
- Financial and business statements
- Personal and business tax returns
- Bank statements
- Business contracts
- Mortgage, loan, and other financial applications
- Sales invoices
- Financial projections
- Stock portfolios
- Deeds
- Receipts
Assessing Income and Lifestyle
A spouse’s income will affect both child support and alimony claims during divorce. However, many spouses underreport or attempt to hide their earnings so they can pay less. A forensic accountant can trace purchases, bank transactions, withdrawals, and more to determine whether a spouse is inaccurately reporting how much they earn.
Much of the evidence concerning income reveals that a spouse has been living far above his or her means for the amount of money he or she reports. This can be compelling evidence of hiding income. For instance, a spouse might be incapable of making certain purchases without earning more money. It’s possible that unreported cash was used that should have been counted as income.
Business Valuations and Asset Division
Family businesses, business investments, and partnerships may be subject to equitable distribution during a divorce. The spouse who wants to retain these interests may claim they are worth far less than they actually are. This allows the husband or wife to potentially gain possession of the business interest without offsetting it by distributing something else of value to the other spouse.
Evaluating the business’s records—including bank and financial statements, tax returns, and loan applications—can provide a clearer picture of what the business or other assets are worth.
This doesn’t mean that the spouse undervaluing the interest will not get to keep it, but the other spouse can make a stronger claim for the distribution of another asset.
Expert Testimony and Legal Proceedings
The job of a forensic accountant may extend to active participation in ongoing legal proceedings. As one example, a forensic accountant could be called as an expert witness during the divorce. By drawing upon their expertise, which is often in a specialized field, the accountant can serve as a credible witness to bolster a spouse’s financial and income claims.
The other spouse might call their own expert witness to repudiate those claims.
The findings made by the accountant could impact mediation and settlement negotiations.
When confronted with evidence of false or misleading statements, hiding assets, and even financial fraud, a spouse is more likely to settle on terms that are fairer. But this would not be possible without the work of the forensic accountant.
Collaborating With Legal and Financial Professionals
Mediation is one way the forensic accountant, divorce lawyer, and other financial professionals join together in high-asset divorces for the client’s benefit. Forensic accounting and divorce proceedings take time and require a close working relationship between the lawyer and financial experts. One way in which the lawyer assists the accountant is a process known as discovery.
Discovery is a formal litigation procedure in which an attorney can request one spouse to turn over important information and documents, like those mentioned above, to the client. These records are then reviewed by the forensic accountant to discover irregularities and evidence of financial misconduct. The attorney can use the accountant’s findings to gain leverage during mediation or present a stronger equitable distribution, alimony, or child support case in court.
Contact an Experienced Greenville Divorce Lawyer
There is much at stake in high-asset divorces, and it may take effort and determination to reveal the exact value of property and the amount of income that will be subject to court and settlement proceedings. Working with your divorce attorney, a forensic accountant can help you feel confident that you’ve litigated or settled your case in the most optimal manner. To learn more about how our law firm can serve you, connect with Elliott Frazier — Family, Personal Injury, & Car Accident Attorneys, LLC. Call us today to get started.
