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What is Forensic Accounting?
One of the issues that family courts must settle during a divorce is the division of property and assets. Sadly, it’s not uncommon to find that one spouse has more control of the finances than the other, leaving the other party vulnerable to financial difficulties. In other cases, one party could be abusing or hiding the marital assets and finances, unknown to the other spouse.
Hidden and unaccounted for assets make it impossible to distribute assets fairly, while unfairly denying one party what is rightfully theirs. If you’re going through a divorce and suspect that your ex-spouse is hiding assets to disadvantage you, you can hire forensic accountants to help you. Family law lawyers in San Diego can work with you to select an expert to work with and protect your rights and interests.
Forensic accountants can leverage their accounting, auditing, and investigation expertise to evaluate financial records and provide clarity in legal settings. The information they uncover can be crucial in ensuring a fair and equitable division of assets. Since financial matters during divorce can be complex, relying on their skills for transparency is essential.
What Functions Do Forensic Accountants Perform in Divorce Cases?
Property division attorneys in San Diego say forensic accountants are skilled in detecting and uncovering financial discrepancies that one spouse may attempt to hide. Their involvement is crucial in high-net-worth divorces with diverse and extensive asset portfolios. Specifically, these experts can play the following roles:
Asset Valuation
When one or both parties to a divorce own businesses, skilled financial experts are often involved in determining the value of the closely held businesses and the income the entities generate. Undervaluation and financial manipulation are common issues, mainly when one spouse controls more business operations.
Common tactics business owners use to manipulate financial records and business assets include:
- Delaying income
- Inflating liabilities
- Disguising personal expenses as business costs
With the help of your San Diego property division lawyers, you can task forensic accountants to distinguish between marital and non-marital assets. Depending on when a business is acquired, all or part of its value may be considered part of the marital estate. Alternatively, the business’s increase in value during the marriage may be regarded as part of the marital estate.
Uphold Financial Transparency
Financial transparency doesn’t always come naturally during divorce. One party may try to conceal assets, exaggerate expenses, or underreport income. Forensic accountants serve as financial detectives who examine financial records to represent the spouse’s financial situation accurately.
They must analyze bank statements, investment accounts, credit records, tax records, and other financial documents to establish discrepancies that might further reveal fake debts, undisclosed assets or income, or diverted marital assets. Standard techniques that spouses use include creating shell companies, making significant purchases, and transferring money to third parties.
Demystify Tax Implications
Property division attorneys in San Diego mention that divorce settlements often have significant tax consequences. Forensic accountants thoroughly evaluate financial records to provide insights into how various settlement options may affect taxes for each party. This information enables divorcing spouses to make informed decisions about asset divisions and support agreements.
With proper financial analysis guided by these experts, you and your ex-spouse can navigate issues such as alimony taxation, filing status, and dependency claims, all of which can dramatically change after divorce.
The Internal Revenue Service (IRS) highlights that your filing status depends on whether you’re legally divorced or separated by the last day of the tax year. These factors can affect your standard deduction, tax rate, and eligibility for certain credits.
Lifestyle Analysis
Forensic accountants can also conduct lifestyle analyses to evaluate how individuals spend their money. These audits can reveal discrepancies between reported income and actual spending habits. With in-depth lifestyle audits, you can provide solid evidence in court to enhance the probability of a fair outcome in the divorce settlement.
Help Calculate Alimony and Child Support
Once forensic accountants determine a couple’s accurate income, it becomes easier for the court to determine fair alimony and child support amounts. The experts can verify income claims, especially for self-employed individuals or those with complicated compensation structures involving stock options and bonuses.
Support payments should reflect each party’s actual financial capacity. If you’re worried you may not get the fair amount of child support or alimony you deserve, talk to experienced San Diego family law attorneys. They can hire forensic accountants to uncover your spouse’s financial position for a fair determination.
Provide Expert Testimony
Besides performing investigative tasks, forensic accountants also serve as expert witnesses in court. Their professional opinions can be pivotal in divorce proceedings as they provide an objective overview of the spouse’s separate and combined financial situation. Forensic accountants should be credible, enabling judges and attorneys to make informed asset division decisions.
Failing to identify and account or all property during a divorce can lead to inequitable property division that disadvantages one spouse. The aim is to ensure equitable distribution, not necessarily equal.
A Skilled Property Division Lawyer Helping You Uncover Hidden Assets During a Divorce
Divorce can be complicated, especially when it involves high-net-worth property division. One spouse could hide assets to prevent them from being subdivided as part of the marital property. If this happens to you, contact skilled property division attorneys in San Diego. They can hire forensic accountants to conduct financial audits to uncover the hidden assets.
Khosroabadi & Hill, APC, is a reputable family law firm in San Diego. We host dedicated property division attorneys who can work on your asset division case to ensure a fair settlement. If your ex-spouse has attempted to hide assets to disadvantage you, we can hire forensic accountants to uncover them. Call us at 858-240-2093 to schedule a FREE consultation.
