The Role of Forensic Accountants in Divorce Cases: Protecting Your Finances

Divorce is already a challenging process, emotionally, legally, and financially. However, it can become even more difficult when a spouse attempts to hide assets in order to avoid an equitable division of property, or paying a fair amount of child support or alimony. In cases where there are financial discrepancies, concealed assets, or misrepresented income, forensic accountants can play a crucial role in assisting an attorney with investigating the matter and ensuring all assets are identified and disclosed.

Key Takeaways

• A forensic accountant is a professional who can conduct an in-depth financial investigation beyond basic document review in a divorce to ensure a fair financial outcome is achieved.
• A forensic accountant can identify concealed assets, trace commingled funds, and accurately value business assets.
• Signs such as a sudden decrease in income, missing financial documentation, and large financial transfers to family members are red flags that may warrant using a forensic accountant in a divorce.

What is a Forensic Accountant?

Full financial disclosure is required in a divorce to ensure a fair outcome in the case. Unfortunately, a spouse will sometimes fail to comply with this legal requirement. A forensic accountant is a professional who can investigate an individual’s finances in a divorce to ensure each party receives their fair share of marital property and financial support. They serve as a financial detective and provide a detailed analysis that can serve as a negotiating tool for spouses. They can also provide the judge with objective evidence in the event the case goes to trial.

How Can a Forensic Accountant Help in Divorce?

A forensic accountant can help in a variety of ways in a divorce case. While they will review bank accounts, tax returns, investments, and mortgage documents, their investigation goes much further than basic document review. They can investigate accounting anomalies, suspicious transfers, and financial information that has been manipulated. Specifically, their role may include:

• Identifying concealed or hidden assets: A forensic accountant can trace the flow of funds to uncover concealed, hidden, or undervalued assets.
• Tracing commingled funds: A forensic accountant can reconstruct financial histories, analyze bank records, and use tracing methods to separate marital assets from separate property where funds have been commingled.
• Uncovering undisclosed accounts: By conducting a thorough investigation, a forensic accountant can uncover undisclosed bank accounts, offshore trusts, securities, and investments.
• Valuing business assets: A forensic accountant can verify and appraise business assets that have been hidden or undervalued.
• Uncovering financial fraud: By meticulously examining financial records and conducting lifestyle audits, a forensic accountant can help uncover whether financial fraud has occurred.
• Assessing the tax implications of a proposed settlement: A forensic accountant can assess the after-tax value of assets and evaluate potential capital gains taxes on the sale of the marital home, real estate, or securities.
• Providing expert testimony at trial: In addition to providing support behind the scenes during the divorce process, a forensic accountant can discuss their findings at trial. They can help the judge understand complex financial evidence to render a fair ruling.

There are many different techniques used by forensic accountants to find hidden assets. Including cash flow analysis and bank record analysis. In addition, they will often conduct a lifestyle analysis and compare reported income with actual spending patterns, or a net worth analysis to track changes in wealth over the course of time. Forensic accountants may also use digital forensics and technology to uncover hidden assets. These tools analyze large volumes of financial data to identify patterns that would be difficult to detect by a manual review alone.

What are Some Signs of Hidden Assets in Divorce?

There are several red flags to look out for when going through a divorce that may indicate a spouse is hiding assets, warranting the use of a forensic accountant. For example, they may suddenly change their behavior or become more secretive about financial matters. Unexplained decreases in income, missing documentation, overpaying taxes, or making large transfers of funds to family members may also indicate that a spouse intends to conceal assets during the divorce proceedings.

Although the discovery process during divorce offers a number of tools to uncover hidden assets, a forensic accountant can conduct a much more in-depth investigation that goes beyond the scope of discovery requests. If financial fraud or wrongdoing has occurred in your case, a judge may impose sanctions, award a larger share of property to the spouse who was deceived, or adjust spousal support accordingly. If financial fraud or concealed assets are an issue in your case, it’s best to discuss your situation and options with a knowledgeable attorney who can best advise you.

Contact an Experienced Missouri Divorce Attorney

If you suspect your spouse is hiding assets during the divorce process, a skilled divorce attorney can help develop a strategy to ensure they are uncovered. Divorce and family law attorney Mark A. Wortman is committed to providing reliable legal services and dedicated counsel for clients facing divorce in the greater Kansas City, Missouri area. If you are going through divorce, schedule a confidential consultation to learn how attorney Mark A. Wortman can help. You can contact Mark online or by calling (816) 523-6100.