When a divorce involves valuable assets, one or both parties might consider hiring a professional with forensic accounting expertise to assist with this procedure. According to the American Institute of Certified Public Accountants (AICPA), this form of accounting entails applying investigative skills and specialist knowledge to gather and analyze financial evidence. Typically, the forensic accountant then presents the findings in an administrative or legal setting. To learn more about what a forensic accountant does during a high net worth divorce and discover how a Colorado family law attorney can help soon-to-be divorcees, call the Colorado Divorce Law Group today at (720) 593-6442.
A high net worth divorce may occur when one or both spouses has a substantial amount of wealth and high-value assets. Usually, the structure of these assets is complex, particularly if the assets have existed for a long time for tax efficiency and succession purposes. The location of the assets might also span multiple jurisdictions, or an offshore trust could hold the assets, making it challenging to determine each party’s entitlement during the divorce proceedings.
Examples of types of high-value assets often concerned in high net worth divorces include::
Per the American Bar Association (ABA), forensic accounting refers to applying scientific techniques and methods to data to systematically investigate a legal or criminal issue. Companies, high net worth individuals, government entities, and nonprofit organizations typically hire accountants in this field to help determine whether certain financial activities are fraudulent or underhanded.
These professionals work on the following legal issues:
Concerning divorce, someone might hire a forensic accounting professional to help with the following:
Forensic accountants can do many things, including ensuring compliance with accounting procedures, tracing discrepancies, and investigating the finances of complex business cases. A forensic accountant may also carry out the following duties during a divorce case:
When a divorce involves children, the court determines the necessary level of child support payments. Sometimes, one parent might understate their income to minimize these installments. Forensic accounting helps to identify the actual income of each party, ensuring these payments are accurate. Learn more about a forensic accountant’s role in a high net worth divorce and understand how a seasoned Colorado family law attorney can assist individuals wanting a divorce by getting in touch with the Colorado Divorce Law Group.
Dividing assets during a divorce often entails tax implications for the couple. High net worth individuals may ask the professional they initially hired to perform forensic accounting duties to help them reduce the effect taxes can have when transferring assets at the end of the divorce proceedings.
If a divorce goes to trial, one or both parties might ask these professionals to be their expert witnesses. Thanks to their excellent communication and analytical skills, these individuals commonly perform this role.
Sometimes, one party in a divorce might try to conceal their assets by transferring them temporarily to family members or friends, exaggerating their liabilities, establishing offshore shell companies, or moving funds to secret accounts. The following forensic accounting methods help uncover these hidden assets:
Another well-established forensic accounting practice used during a divorce is the net worth technique, which involves analyzing the contrast between an individual’s net worth, or total assets minus total liabilities, within a certain period. Here, the accountant looks at gathered financial data to determine whether that person’s net worth prior to the initiation of divorce proceedings matches its current value. If the accountant correctly applies this method and identifies a disparity, it can be strong circumstantial evidence demonstrating that the individual is hiding their assets.
If a divorce involves considerable assets, dividing them can often be a complex process, especially if the couple had convoluted financial arrangements in place. In this scenario, some individuals may consider forensic accounting to help investigate the other party’s financial affairs and boost the chances of equitable asset division. Find out more about the role of a forensic accountant in a high net worth divorce and explore the legal options available to those going through a divorce by contacting a Colorado family law attorney from the Colorado Divorce Law Group at (720) 593-6442.