Forensic Accountants: What Is Their Role in Divorce?
During the divorce process, divorcing parties need to handle financial matters with caution as they spend a considerable amount of time tackling financial issues. In many cases, the divorce process takes longer than expected because of these issues. Even though some divorcing couples have an easy time dealing with financial matters, many face difficulties. For some, the process of dividing marital assets and liabilities runs smoothly, whereas, for others, the process cannot run smoothly without expert intervention. According to a Forbes article, most divorcing couples with intricate financial portfolios have a hard time dividing assets and liabilities between one another.
Because of the financial impact of divorce, both the attorney and client need to ensure that all assets and liabilities are accurately valued and justly divided. When a divorcing couple cannot get an accurate picture of the marital financial holdings, it may be time to engage the services of a financial expert. One such expert is a forensic accountant.
As a general matter, one party will hire a forensic party to deal with his/her financial issues; however, it is technically possible for parties to jointly rely on only one expert. Depending on the nature and scope of the work for the forensic accountant, confidentiality in the relationship and financial conclusions may or may not exist.
In a courtroom proceeding, a forensic accountant will assume the role of expert witness. It is possible that each party will hire an independent forensic accountant and both may testify, offering differing expert opinions. Financial matters are often not cut-and-dry.
What Is the Role of a Forensic Accountant in Divorce?
Among many other things, forensic accountants commonly perform the following:
- Determine value of a business or corporation, or when multiple owners or partners are involved, determine the marital value from one or both spouses in that entity;
- Determine the income generated or the income that should be generated by the business or corporation;
- Identify and assign a value on all marital assets and liabilities.
- Perform complicated calculations to extrapolate values when marital assets or liabilities have a pre-marital or other non-marital component or possibly perform a similar calculation regarding a pension.
The most common scenario in which a forensic accountant is used in family law cases is when there is a marital interest in a corporation or any business entity. In that case, the corporation or business entity has to be valued and the expert needs to determine the income generated from the business. Forensic accountants can also be used when marital values of assets and liabilities have to be calculated or extrapolated because of non-marital or third party interests, for example. Lastly, there are circumstances where one spouse or the other has not been candid or cooperative in financial disclosure. In this case, the forensic expert can obtain court permission to examine financial and related records so that an accurate and full disclosure and valuation can be accomplished.
When discussing a new case with counsel, be sure to mention all financial aspects of your marriage so that your attorney can determine if a forensic accountant may be needed. Certainly, if such an expert is needed, please consult counsel to make this decision.
Contact a Jacksonville Divorce Lawyer Today
To know whether you need a forensic accountant, you should consult an experienced divorce attorney who can properly guide you on exactly when you need to hire a forensic accountant. To learn whether your situation requires a forensic accountant’s services, contact a Jacksonville divorce lawyer today at The Lasky Law Firm to schedule a consultation.