The benefits of forensic accounting for divorce
One of the most challenging aspects of divorce is the division of assets. This is especially true when division of assets is complex, such as in high net worth cases where assets are extensive. In some cases you may even be concerned that your spouse is hiding assets, or that the full extent of your joint assets are being underrepresented.
This is where your lawyer can utilize the help of a forensic accountant.
But what is forensic accounting? And what are the benefits of forensic accounting for divorce?
How Does Forensic Accounting Work?
The skills of a forensic accountant are used for far more than just divorce. Forensic accounting involves in-depth investigative analysis of finances (either that of an individual or business). This advanced forensic tracing employs the use of software, and other applications, to track down even the most obscure financial details.
Forensic accounting also helps ensure the precision of the numbers. When reporting financials to a court, it’s crucial that the numbers are accurate. Forensic accountants will uncover these numbers to the furthest degree.
While not all forensic accounting is for unscrupulous situations, it is often used to uncover missing funds, or funds that have been dishonestly hidden.Forensic Accounting for Divorce
So what does this have to do with your divorce?
There are several key benefits of forensic accounting for divorce.
The most obvious scenario for needing forensic accounting help is when you believe your spouse is hiding assets. If your household uses simple savings vehicles, such as savings accounts, this may not seem likely. When complex assets are involved, the likelihood is high. A jointly owned business is an example of a complex asset where value could be hidden. (Other examples include when one spouse manages the vast majority of finances, highly private/abstract assets like intellectual property, digital assets/crypto, or collections).
A forensic accountant helps to ensure that all assets are “on the table” and reported when presented to the court. It also helps your lawyer build your case (this is much harder for your lawyer to do when details are missing).
Forensic accounting also protects you and the spouse whom you are divorcing from accidentally omitting financial details.
It’s important to NEVER lie about your assets during a divorce case. According to the National Endowment for Financial Education, roughly 30% of married people admit to being deceptive about money in their marriage. The consequences for lying about debts and assets in court can be severe, ranging from hefty fines to jail time. Forensic accountants often uncover deception of this kind.
Using a Forensic Accountant in Your Divorce
If you believe you’ll need a forensic accountant for your divorce, consult with your lawyer first. A family law attorney can guide you through a discussion about your financial details, concerns, and why you may need a forensic accountant. Your divorce lawyer will be able to discern the need for forensic accounting based on your specific circumstances.
It’s comforting to have the support of both an attorney and a forensic accountant. If necessary, this option can provide peace of mind and better results for your post-divorce future.
If you have questions or you’re considering starting the divorce process, reach out to us. We can walk you from the first step to the last and provide you with the knowledge and right direction necessary to make the process as smooth as possible.