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Specialty tag(s): High Net Worth Divorce, Divorce, Divorce for Business Owners

The Role of a Forensic Accountant in a Divorce

Ryan R. Bauerle | October 14, 2024

Divorce is a complicated process, especially when it comes to untangling the financial aspects of a marriage. That’s why many utilize the expertise of a forensic accountant. What is a forensic accountant? In a divorce, these professionals offer invaluable support by ensuring a fair and equitable distribution of the marital estate, while also addressing the financial responsibilities of both parties.

What Does a Forensic Accountant Do in a Divorce?

Forensic accountants for a divorce are specialized professionals who use accounting skills to investigate financial matters such as discrepancies in ledgers, hidden assets, illicit spending, valuing closely held businesses, and varied income sources. Further, a forensic account may be able to offer expert opinion testimony, whereby a party can only testify about facts.  In the context of divorce, forensic accounting can help with:

• Financial Disclosure and Investigation: The main purpose of a forensic accountant in a divorce is to ensure full financial disclosure from both parties. Before an estate may be divided, property must first be identified, characterized, and valued.  This process often involves reviewing financial statements, tax returns, bank records, and other financial documents to uncover any hidden assets, questionable purchases, or undisclosed income. Forensic accounting during a divorce also includes verifying the accuracy of the disclosed information and identifying any discrepancies.
• Valuation of Assets: Forensic accountants for a divorce are often asked to value marital assets, which can include businesses, real estate, and investments. They use a variety of valuation methods to determine the fair market value of these assets, which is essential for equitable division.
• Expert Testimony: A forensic accountant hired for a divorce can provide expert testimony in court, presenting their findings clearly and concisely. Expert testimony may carry more weight to the trier of fact as opposed to a party with an interest in the outcome of their case.

Why Hire a Forensic Accountant in a Divorce?

• Enhanced Fairness: Forensic accounting in a divorce helps ensure full financial disclosure and accurate asset valuation, which promotes equity in asset division.
• Reduced Litigation Time: Clear and comprehensive forensic accounting for a divorce can expedite the legal process, potentially reducing the length and cost of litigation. For example, sometimes the parties will agree upon a neutral expert to conduct a valuation of a family business as a cost-saving measure.
• Informed Decision-Making: With the detailed financial analysis provided by forensic accountants in a divorce, both parties can make informed decisions regarding settlements and support arrangements. Many times these experts are useful in mediation and facilitating informal settlement agreements.

When Is a Forensic Accountant Needed for Divorce?

Not every divorce will require the use of a forensic accountant. However, their expertise can be particularly valuable for divorcing couples in certain situations, such as:

• Complex Financial Circumstances in a Divorce: Forensic accountants can be helpful for couples with complicated financial situations involving businesses, investments, or multiple income sources.
• Tracing Separate Property:  If a party is seeking to have their separate property confirmed, best practices are to have their claims traced so they can carry their burden of proof.
• Suspected Financial Misconduct: If one party suspects that the other is hiding assets or engaging in financial misconduct (such as spending on a paramour), a forensic accountant can conduct a thorough investigation to reveal them.
• Disputed Asset Valuations: When there is disagreement over the value of significant assets, such as a business or real estate, forensic accounting ensures accurate valuations.
• High-Net-Worth Divorces: High-net-worth divorces often involve substantial assets and complex financial structures that needs to be properly accounted for.

How to Find the Right Forensic Accountant for Your Case

Choosing the right forensic accountant for divorce is essential. Here are some divorce forensic accounting tips for finding the right professional:

• Consult Your Divorce Lawyer: Most divorce lawyers have a network of trusted forensic accountants they can recommend.
• Verify Credentials and Experience: Ensure that the forensic accountant you choose has the necessary credentials and experience in handling divorce cases.
• Understand Their Approach: Discuss their methodology and approach to ensure that it aligns with your needs and expectations.

Contact Goranson Bain Ausley for Assistance With Your Case

The role of a forensic accountant in a divorce can be indispensable for navigating the financial complexities of divorce proceedings. But for all other divorce-related matters, you’ll want to turn to an experienced family law attorney you can trust. Contact us today to schedule your consultation and find out how a Goranson Bain Ausley attorney can help you ensure you receive the outcome you deserve.