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How Can a Forensic Accountant Assist With the Divorce Process?

Getting a divorce can be a complex process, and couples will need to determine how to address a wide variety of legal issues and financial concerns. Gaining a full understanding of a couple’s financial situation can sometimes be difficult, and this is especially true in cases where spouses own valuable assets such as businesses, have complex investments, earn large incomes, or have a high net worth. In some cases, spouses may attempt to hide or undervalue assets in order to manipulate the outcome of the divorce settlement. In others, spouses may struggle to fully understand the value of the assets they own. A forensic accountant can play a crucial role in addressing financial concerns and ensuring that both parties will be able to meet their ongoing needs.

A forensic accountant can investigate financial discrepancies, determine the value of different types of assets, and provide an analysis of a couple’s finances to ensure that these issues can be addressed correctly during divorce proceedings. They are trained to dig deep into financial records, identify irregularities, and present their findings in court. A family law attorney can work together with a forensic accountant to analyze complex financial information, ensure that marital assets can be divided equitably, and establish financial support orders as necessary.

Uncovering Hidden Assets

One of the main roles of a forensic accountant in a divorce case is to uncover any assets that one spouse may be trying to conceal from the other. There are many methods that a spouse may use to conceal assets in order to avoid dividing them with their partner or otherwise influence financial decisions during the divorce process. They may transfer money to offshore bank accounts, fail to disclose income sources, undervalue business interests, pay false debts to friends or family members, secretly purchase cryptocurrency, or physically hide valuables in a home or other locations, to name a few examples.

To uncover hidden assets, forensic accountants may employ various techniques, such as examining tax returns, reviewing bank statements and financial records, and analyzing business transactions. They may also dig into the finances of a business owned by a spouse, looking for suspicious activity such as wages paid to nonexistent employees. By identifying any assets or income that was not properly disclosed during the divorce process, a forensic accountant can help ensure that all marital assets will be divided correctly, and a spouse who attempted to hide assets may be held responsible for their attempts to unfairly influence the divorce process.

Determining Asset Valuations

In addition to finding hidden assets or income streams during divorce proceedings, a forensic accountant can help spouses determine the proper value of the assets they own. This can ensure that both spouses have a full understanding of their financial situation so that all of their marital assets can be divided fairly and equitably. A forensic accountant can assist with:

  • Evaluating business interests: In cases where a spouse is a business owner or has significant investments in one or more companies, a forensic accountant can conduct a thorough business valuation. By using methods such as the evaluation of assets and liabilities, discounted cash flow analysis, and comparable company analysis, the current and future value of business interests can be determined. This will ensure that spouses will have the information needed to determine how ownership of the business will be handled going forward.
  • Assessing real estate properties: Real estate holdings can be a significant part of a couple’s marital estate. A forensic accountant can help perform accurate valuations for any properties owned by a couple, including their marital home, guest homes or vacation homes, and commercial properties that generate income. By considering factors such as market conditions, comparable sales, and potential income from rental properties, a forensic accountant can provide a couple with a full understanding of the value of these assets. This will ensure that spouses can determine how ownership of different properties should be handled.
  • Evaluating investments: Spouses may have investments in stocks, bonds, mutual funds,
    or other financial instruments. Determining the value of these investments is not always easy, but a forensic accountant can perform an analysis to determine the current value of these assets and their expected future growth. They can also provide guidance on the tax consequences of dividing or selling investments during the divorce process.

Analyzing Income and Expenses

A forensic accountant can also analyze a couple’s financial situation to make sure spouses have an understanding of the income earned by both parties, the ongoing expenses that will need to be paid, and other issues that may affect them on an ongoing basis. This analysis can be particularly important when determining spousal support (also known as alimony) payments. A forensic accountant can assist with:

  • Evaluating reported income: In some cases, a spouse may attempt to underreport their income or inflate their expenses to minimize their potential support obligations. A forensic accountant can carefully examine tax returns, pay stubs, bank statements, and other financial records to ensure that reported income is accurate and that spousal support or child support obligations can be calculated correctly. 
  • Evaluating business expenses: If either spouse owns a business, a forensic accountant can scrutinize the company’s expenses to verify that they are legitimate expenditures related to the operation of the company rather than personal expenses disguised as business costs. In some cases, a spouse who owns a business might attempt to funnel personal expenses through the company's accounts in an effort to reduce their reported income and limit the amount of support they may be required to pay.
  • Lifestyle analysis: A forensic accountant can perform an analysis of a couple’s spending habits and other activities. By evaluating the standard of living during the marriage and comparing it with reported income and assets, a forensic accountant can determine whether there are any inconsistencies or unexplained discrepancies that may point towards hidden assets or undisclosed sources of income.

Expert Witness Testimony

Forensic accountants can also serve as expert witnesses in court proceedings. Their knowledge and credibility when addressing financial concerns can be invaluable when presenting complex information to a judge. A forensic accountant can explain their findings clearly and concisely, making them easily understandable for people who are not financial professionals. They can also provide expert opinions on matters such as asset valuations, income determinations, and lifestyle analyses. This can ensure that a judge will have all the information needed to make decisions about property division, spousal support, child support, or other divorce-related issues.

Contact an Experienced DuPage County Divorce Attorney

If you are planning to get a divorce or have already begun the process of ending your marriage, and you suspect that your spouse is hiding assets or manipulating financial information, you can benefit by receiving legal representation from an experienced Naperville divorce lawyer who can work alongside forensic accountants to address these issues. Your attorney will be able to guide you through the divorce process effectively while ensuring that your rights are protected. By taking the proper steps to address financial concerns during your divorce, you can make sure you will have the resources needed to succeed after your marriage ends.

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