In many situations, a divorce becomes an emotionally-challenging experience. The reality is that two people are ending a life contract. One subject that causes significant contention between divorcing couples is financial matters. When the financial situation is complicated, it is common for a divorce attorney representing one of the spouses to hire a forensic accountant. The goal will be to discover any hidden assets as well as provide any expert testimony at a hearing for the divorce.
Forensic Accountant
These are accounting professionals who have training that enable them to carefully examine business, personal and public financial records. Their examination will not be about what is in the records, but what is being withheld from the records. A forensic accountant knows how to detect trends in financial documents. They will notice when gross revenues increase over specific periods of time as gross profits decline. When a reason for any of the discrepancies is given, a forensic accountant will know if the answer has been contrived for the divorce proceedings or if it is actually credible.
Hidden Assets
There are many different ways an individual may try to hide assets during divorce proceedings. The types of assets most often hidden include stocks, cash, annuities, bonds, mutual funds, insurance policies and more. In some situations, people have gone through an elaborate process of putting assets into offshore accounts. It’s also possible for people to sell expensive items for a nominal amount of money to a friend and family member. Their goal is to get them back after the divorce. They will then own the value of the item exclusively. Some people use a safe deposit box to store items of value for a short period of time. People have given significant amounts of money to a friend or family member prior to a divorce claiming they are paying a debt. Once the divorce is final, the friend or family member returns the money. Remember that all property brought into a marriage and obtained during a marriage is usually considered community property and belongs to both spouses.
True Income
One of the goals for a forensic accountant is determine a spouse’s true income. It is possible for people to have an income stream that is not recorded. They could be paid in cash for their participation in a business. This will be evident with cash bank deposits. It’s also possible for individuals to be paid for consulting and more off of the books. A person may also not be showing future payments from an investment. People have had delayed payments of business contracts as well as bonus payments, raises and more delayed until after a divorce. Income can be a primary factor in deciding if there should be an amount of spousal support awarded.
Tax Returns
One of the most important financial documents a forensic accountant will review is income tax returns. It is possible for one spouse to not have access to other spouse’s most recent tax returns. Should a spouse not want to provide their tax return, it may be possible to obtain a copy from the Internal Revenue Service (IRS). Tax returns are important in a divorce as they indicate income a person earned during the previous year. They will also show the amount of interest and other earnings they were given. A tax return can also show any assets recently sold and more.
Dirty Tricks
It is possible for a spouse to stall when it comes to providing documents during a divorce. When the documents are provided, they could be disorganized. Important items may be missing. In some situations, records have been provided that have obviously been manipulated and more. Proving it in court could be a challenge. This is often the case when a person has majority cash business or has been hiding assets for many years.
Public and Private Records
A forensic accountant will know how to conduct a thorough search of all possible financial records. Private as well as public records will be analyzed. Public records could reveal property transfers, bankruptcies, judgments, liens, and more.
A divorce attorney understands the benefits of hiring a forensic accountant. These professionals can locate financial information that others without their training would overlook. It often results in the client of a divorce attorney receiving a more accurate and fair divorce settlement.
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