Every divorce has its unique challenges — but for high-asset couples, the first challenge may be as basic as figuring out everything that’s owned and what value to attribute to each holding. That’s before you get to the part where you have to try to divide things up, all the while figuring out the income and tax consequences you face with each different maneuver.
That’s just one of the reasons that any high-asset divorce should include a forensic accountant. Even though your divorce attorney may be adept at figuring out the right nuanced wording for your divorce agreement, he or she can use the guidance of a financial expert to help guide that wording.
A forensic accountant is also useful in other ways, particularly if one spouse is less financially savvy than the other. The forensic accountant can help that spouse and his or her attorney make sense of disordered business paperwork and dig through files to see if income is being manipulated away from the marital pot through the spouse’s business dealings.
It’s important to remember that it’s incredibly common for spouses to hide assets from each other, even among couples of more modest means. One out every five Americans has spent more than $500 on a purchase without telling their spouse, hiding the expense on a credit card or pulling the money out of a hidden bank account. There’s good reason to suspect that your spouse might do the same, particularly if he or she hasn’t ever been the most forthcoming about financial dealings in the past. You don’t want to miss hidden assets that you have a right to share or overlook a debt that shouldn’t be yours to bear.
Finally, a forensic accountant can help determine a self-employed spouse’s true income. It isn’t unusual for tax records to be a poor reflection of the actual income coming through a business due to the somewhat broad latitude given for business deductions and other expenses. If your spouse regularly “expenses out” his or her living costs, that could artificially lower the reported business income.
For more information about including a forensic accountant on your divorce team, discuss the situation with your attorney. He or she may be able to help you decide if the expense of hiring an expert is a wise one.
Source: Forbes, “Why A Forensic Accountant Belongs On Your Divorce Team,” Jeff Landers, accessed March 17, 2017