During a divorce, the spouses must divide their marital property and assets in accordance with state laws. Each spouse must disclose his or her financial information to ensure an equitable distribution of marital property. Some divorces can be messy affairs, and bitterly resentful divorcing spouses may attempt to illegally shield some of their assets from division. If you have any reason to believe your soon-to-be-ex-spouse has hidden, or will hide, assets in your divorce proceedings, a forensic accountant can help.
What Does a Forensic Accountant Do?
As the name suggests, a forensic accountant is a financial expert specializing in the legal aspects of money transfers. Due to the nature of many types of property and investments, it can be relatively easy for someone to hide increased valuation, funnel money quietly into a private bank account, or otherwise defraud a spouse of rightful marital property. A forensic accountant will review all the financial paperwork involved in a divorce and carefully review the assets listed in a divorce to determine ownership. Forensic accountants are very good at determining when financial fraud has occurred and can help ensure an equitable divorce.
A forensic accountant essentially functions as an expert witness. In any civil legal matter, either side may call expert witnesses to support a claim in court. Financial experts like forensic accountants can provide the court with a sound professional interpretation of the situation, potentially making property division easier for those involved. If one spouse accuses the other of hiding assets or attempting to defraud the court, a forensic accountant can investigate.
Why You Should Have a Forensic Accountant on Your Divorce Team
Any divorce carries the potential to escalate into a heated battle between two angry spouses, and any financial fraud can exacerbate the issue and make a divorce agreement harder to reach. If your ex sees that you have hired a forensic accountant to assist with your divorce, he or she will likely be far less likely to attempt any fraud by hiding assets.
If your ex earns more than you do, and you will receive primary custody of your children, you must ensure he or she reports his or her income accurately so you receive the appropriate amount of spousal support, alimony, or child support. If a higher-earning spouse attempts to understate his or her earnings, a forensic accountant can investigate and uncover the truth. Any spouse who attempts to lie through divorce proceedings or illegally hide assets damages his or her position in the case and may even face criminal penalties.
It is also possible for an employer to collude with an employee to assist the employee in divorce proceedings. For example, if the employee expects a bonus or raise, he or she may ask the employer to withhold this bonus or wait on this change until after the employee’s divorce is final to protect the additional funds from division. This is almost always illegal, as employers have a fiduciary responsibility to pay their employees on time and in accordance with state law. Forensic accountants can find financial documentation and other evidence through a spouse’s employer to ensure the spouse has reported his or her income accurately.
Penalties for Lying About Assets in Divorce
The thought of splitting your property and assets with your ex may be unpleasant, but the penalties for attempting to hide your assets far outweigh the effects of dividing your property. If you choose to try and hide assets instead of simply dividing your property lawfully, you could face a civil suit from your ex for his or her lawful share of those assets. You may also face criminal penalties in some states. Ultimately it is never worth the potential risk to try and hide assets in a divorce.