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Not every divorce needs a forensic accountant; however, when dealing with couples with a sizeable net worth or high assets, it may be in both parties’ interests to utilize one as part of the professional financial team. A forensic accountant can help untangle assets, ensuring proper accounting and an equitable distribution of assets in the divorce.
One of the major hurdles a forensic accountant may encounter is access. Without discovery or court orders, accountants may not get access to the information they need to unwind complicated financial matters. At O’Cathain Law Group Family Law Department, we work with trusted forensic accountants to ensure our clients have the knowledge they need to make decisions about a divorce and about their economic future. Schedule a consultation with a dedicated high-asset divorce attorney to learn more about the role of forensic accounting in Hackensack high-asset divorce cases.
An accountant is a financial professional who reviews and analyzes financial records. They may track income, expenditures, and tax liabilities for companies or individuals. Accountants may audit companies, analyze costs, forecast expenditures, and help people with financial decision-making. Some accountants handle tax planning and tax preparation.
Forensic accountants are accountants who do their work in a legal setting. They specialize in complex financial matters that often go beyond traditional accounting. Often, these accountants look for hidden assets or unwind assets that may be tied up with other parties. For example, one spouse may be a partner in a business with other people. The forensic accountant in Hackensack would need to determine the financial value of that person’s share of a business during the high-asset divorce process.
A forensic accountant performs multiple functions in a divorce. Toward the beginning of a divorce, both parties, assisted by their dedicated family law team, must prepare financial statements. The forensic accountant examines those statements and compares them to other evidence of the parties’ finances. They may examine financial documents like:
Looking for discrepancies can help the accountant decide where to start in their financial analysis.
Even if neither party appears to be hiding anything, a forensic accountant in Hackensack can still play a role in a high-asset divorce. They can appraise the value of assets. Some assets, such as stocks, property, and shares in businesses, are relatively complex and may have increased in value since their acquisition. Evaluating property can help in asset division in a contentious divorce. It can also help people in an amicable divorce divide properly while still negotiating potential tax consequences by minimizing capital gains.
Many high-asset families can trace some of their assets to inheritances or other sources of family wealth. While gifts or inheritances are generally separate assets, if the parties have combined those assets, it can be challenging to distinguish between marital and separate assets. A forensic accountant can trace assets and help separate the property into marital and separate designations.
Self-employed people, people who own their businesses, or people whose income depends on commissions or bonuses can easily hide assets. A forensic accountant can help prove an actual income, which the court can use to determine child support and alimony.
Most people do not need a forensic accountant to help with their divorce proceedings. However, almost every high-asset divorce case needs the help of a forensic accountant. Even if both parties are dealing fairly and honestly with each other, the complexity of high-value assets can make it challenging to distribute assets equitably.
People with more money may have more incentive to try to hide assets. Until both parties completely understand their financial picture, it is impossible to suggest or accept a fair settlement offer. A family law attorney from O’Cathain Law Group Family Law Department can help you understand the role of forensic accounting in Hackensack high-asset divorce cases. Schedule a consultation to learn more.