During your divorce case, your attorney may recommend that you hire a certified public accountant with specialized training as a valuation expert or as a forensic accountant or both. A valuation expert, also known as a business valuation expert, has training and expertise to determine the fair market value of marital assets, including business interests, pensions, annuities, and retiree health insurance benefits. On the other hand, while a forensic accountant, may also have training as a valuation expert, forensic accounting focuses on looking for financial irregularities in the books of a business as well as looking for a hidden business or personal assets. Here, we will discuss why a business valuation expert or forensic accountant may be used in a divorce.
Forensic Accountants in Divorces
A forensic accountant is tasked with providing specialized support to a legal team in divorce proceedings (they are also used in custody disputes). The findings of a forensic accountant can be extremely significant In a divorce, during the discovery process, each party will gain access to the other party’s financial statements and related records. While informative, these records may not paint a complete and accurate picture of the other party’s financial situation. For instance, a person may be using his or her business to pay personal expenses. There may be assets hidden amongst business assets. A forensic accountant is used to get the full story. He or she is used to looking through extensive amounts of financial data to get an accurate picture of the financial status or business interests of one or both of the parties.
A business valuation expert will value both jointly held assets as well as individual assets held by each party. In a case involving business interests, pensions, or other retirement assets, one or both of the parties may retain a valuation expert to testify at trial or, as the case may be, to participate in settlement discussions.
There are a number of reasons why your attorney may consider employing the services of a forensic accountant or business valuation expert in your divorce case. First and foremost perhaps, one or both of these experts will undertake an in-depth analysis of relevant financial records to make sure that there are no hidden assets and no financial irregularities in the accounting records of a marital business entity or sole proprietorship. This is particularly critical if the divorce is a complicated high net worth divorce or other types of divorce with complicated financial issues. If you suspect that your spouse is hiding assets or income, employing a forensic accountant can put your mind at ease. A forensic accountant can also help you understand how a divorce agreement may impact your financial future. The best-case scenario is to have as a member of your team a certified public accountant credentialed as a business valuation expert and as a forensic expert. In Alaska, there are several accounting professionals who are credentialed as valuation experts and forensic experts.
Other times you may want to have a forensic accountant and/or business valuation expert involved in your divorce include:
- Your spouse is an independent contractor who reports his or her income on a Schedule C as a sole proprietor or a sole member LLC,
- There are conflicts over how property will be divided,
- There are conflicts over a spouse’s ability to pay spousal or child support,
- Your spouse is the sole owner of a business or owns an interest in a business entity such as a partnership, limited liability company, or corporation and you and your spouse do not agree on the value of these marital interest(s)
- Your spouse has significant pre-marital assets, which you contend should be treated as marital property,
- There is evidence of a sudden increase in the spending of jointly held funds coinciding with the separation or filing of a divorce actions
Alaska Divorce Attorney
If you are entering a particularly complex divorce, a business valuation or forensic expert can be part of your team to help ensure your interests are protected. For trusted legal support before, during, and after your divorce, The Law Offices of Peggy A. Roston is here for you. Contact the Law Offices of Peggy A. Roston today.
Posted in: Divorce