Divorce can be a stressful, emotionally draining process. This is especially true in cases where one spouse is the breadwinner – or earns the vast majority of the household income – while the other spouse is left in the dark about couple’s true financial situation.
In the event of a divorce, your incomplete understanding of your spouse’s assets and income could prove extremely damaging for your settlement. If your spouse isn’t transparent about their assets with their lawyers, it could prevent secret funds or property from being divided with you. Such assets may include:
- Retirement funds
- Real estate – locally or abroad
- Bank accounts – locally or abroad
- Businesses or private practices
- High-value collectibles
While the prospect of blindly tracking down assets you know nothing about may seem daunting, it’s not something you have to tackle on your own. In such cases of high-asset divorce, it can prove extremely valuable to have not just an experienced lawyer on your divorce team, but a forensic accountant as well.
What is a forensic accountant?
A forensic accountant is essentially a private investigator of all financial matters. They know how to trace undisclosed assets and prove that an individual is worth more than they claim. Forensic accountants have many tools to achieve this. For example:
- Tracing analysis: This is an analysis of your spouse’s bank transfer history, which could involve looking for significant transfers – or transfers in which the receiving account is hidden.
- Lifestyle analysis: This is a thorough financial evaluation, comparing all of your spouse’s expenditures to the income they’ve reported. If there’s a significant discrepancy between the money ostensibly coming in and the money actually going out, this would point to hidden income – and warrant further investigation.
- Bank loans: If a spouse is under-reporting their assets and income during a divorce, a good way to prove their deception is to find other official sources of reported income. If the spouse took out a personal or business-related bank loan, a forensic accountant could compare the income and asset information listed on the loan application with the amount reported in the divorce.
A forensic accountant can create a powerful advantage for spouses in certain divorce scenarios. However, such investigations can be costly – so it’s important to understand whether the potential pay-out warrants the price. It’s best to only consider utilizing a forensic accountant when high assets are at stake.