FORENSIC ACCOUNTANT
DO I NEED A SHARK TO REPRESENT ME IN MY DIVORCE CASE?
July 13, 2020
A forensic accountant can be a very important asset to the professionals assisting a client in a divorce case. The accountant can be used on a variety of issues that commonly arise during the case including establishing cash flow available for support (child and/or spousal), establishing the marital standard of living (msol), establishing the value of any business(es)involved, and providing income tax guidance.
On the support issue, if both parties are W-2 earnings, it is less likely that a forensic accountant would be involved than a situation where one or both parties are self-employed. If a party is self-employed, there are creative ways to “hide” income claiming the income to be expenses. A forensic accountant would be valuable to determining the validity of the claimed expense and can assist in determining if the amount of the expense is legitimate. As an example, a self-employed person writes 100% of his/her car expenses, the forensic accountant will be able to say whether the 100% is legitimate, or whether some lesser amount is more appropriate. Doing that on all of the claimed expenses can greatly increase the amount of income available for support and therefore increase the amount of support to be paid.
The msol is one of the factors the court must consider when ruling on the amount of support to be paid. The analysis done in connection with the income available for support will be helpful on this issue as well. Generally speaking, the accountant will look at the income for the last 2-3 years of marriage as a starting point in the determination of the msol. If there were children still in the household during the relevant period, the accountant will factor the child(ren)’s expenses into the analysis. The entire process is a lot more complicated than can be adequately described herein.
If a business is involved, it is almost essential for a forensic accountant to be involved. Without the input of the accountant, it is extremely difficult if not impossible to present evidence sufficient to establish the existence of the goodwill of a business which is just one component of the business value as a whole.
Finally, there are always income tax consequences in a divorce case. In the higher value cases, the accountant will be able to counsel a client on income tax consequences that may occur in the division of the assets. What is important is what a client will end up within assets after taxes have been paid. I do not give tax advice so whether a forensic accountant is hired or a client uses their own accountant is critical.
How Is A Forensic Accountant Utilized In A Divorce
Case?
