Do You Need a Forensic Accountant in Divorce?

The division of community property in a Texas divorce should be straightforward. The general rule is that any property obtained while married is community property, which you will divide equally. However, sometimes the division of community property is more complicated. For example, your spouse might be hiding assets, such as wages or bonuses earned while working, or investment income. When a spouse has a small business, cash flow can be manipulated to hide profits. And certain assets are difficult to value properly.

At Tad Nelson & Associates, we work with forensic accountants for many high net-worth divorces. They are just one of the many experts who come in useful for certain divorces. Our League City and Galveston divorce lawyer identifies the accountant’s role and why they are helpful.

A Closer Look at the Forensic Accountant’s Role

Forensic accountants provide accounting services for legal cases. They are typically highly trained and experienced professionals who understand reporting requirements and modern financial statements. Forensic accountants have a role to play in the division of community property.

In the typical divorce, each spouse must fully disclose bank accounts, real estate, investments, and other assets in their name—even if they think the asset is their separate property. A judge will then decide if the asset is separate or communal property.

Forensic accountants can step in if there are suspicions that one side has failed to disclose assets. This makes a true division of community property difficult. A forensic account can sift through financial records and review transactions. They might see that your spouse paid a bill using a strange bank account with a home address in a different state. A forensic accountant can review tax statements and bank records, as well as business records.

Some spouses are tempted to hide assets. That is flat out illegal, and any spouse hiding assets will face sanctions in court. For this reason, using a forensic accountant often makes sense if you have an inkling that your spouse refuses to make a full disclosure.

What Other Duties Do Forensic Accountants Perform?

Forensic accountants don’t simply try to track down hidden assets. They also have important roles to play even when all assets are disclosed. For example:

• Some assets might be both separate property and community property. For example, one spouse might have bought a vacation property while single, so that is separate property. Once married, they use community assets to make improvements on the property, such as adding an addition. A forensic accountant can help untangle how much of the equity in the property is separate and how much is community.
• A forensic accountant can try to trace cash in an account to determine if it is separate or community property. For example, you might have inherited $40,000 from your mother and put it in a bank account. You also place wages, which are marital, in the same account.
• Forensic accountants help valuing a business. You can use different methods, which could yield dramatically different valuations. A forensic accountant can work with other experts to review cash flow and bank statements to arrive at a valuation.
• A forensic accountant can help value rare assets like heirlooms, artwork, or jewelry. Forensic accountants can also help with cryptocurrency valuation, which is increasing in importance over the past decade.
• Forensic accountants help your legal team pull together financial information to disclose to the other side. This helps you fulfill your duties to disclose information accurately.

A forensic accountant can also help determine how much money is available to pay for child support or alimony. When a spouse has multiple income streams or irregular income, this is often confusing.

Do You Need a Forensic Accountant?

These are valuable experts to have in a divorce, but not every client will need them. For example, your community assets might be uncomplicated: a home, retirement account, and cash in a bank. You also might not have any suspicion that your spouse is hiding anything, in which case hiring this type of professional would be a wasted expense.

We employ forensic accountants on a case-by-case basis. They make sense for some clients but not others. As mentioned above, however, they can provide critical evidence in certain cases. If your spouse has failed to make a full disclosure, we can request an unequal share of the community property, so in that situation an accountant will pay for themselves.

Call Our Galveston Divorce Lawyer with Questions

A forensic accountant might be just what you need as part of your divorce team. Contact Tad Nelson & Associates to discuss the division of community property or any other divorce-related issue.