A divorce involving a high net-worth couple presents unique challenges. In such cases, a forensic accountant is almost always needed to unravel complex financial issues.
The size of the net worth in a case is a major factor in determining how involved a forensic accountant must be. Often, high net-worth divorces require a comprehensive business evaluation conducted by an expert accountant who is adept at properly handling such matters.
For instance, consider the true scenario of a potential divorce that involves the ownership of 35 automobile dealerships. The total net worth of this estate was about $300 million. This requires a meticulous assessment to ensure a fair division of assets. We will prepare the valuations of the business and shed light on the financial intricacies that impact the potential divorce settlement.
How Long Does It Take to Complete Forensic Accounting Work?
The time frame for completing forensic accounting work varies. In high net-worth cases, the process could take up to a year and, in many complex cases, several years. A good example is our published case In re Marriage of Ciprari (2019) 32 Cal.App.5th 83, 242 Cal.Rptr.3d 900 involving 17,000 lines of data from a 14-year marriage. Our work involved careful asset valuation and tracing (the process of determining the origin of each asset). This was especially needed because a party claimed separate property. Each line of data must be evaluated and allocated to determine if it is separate or community property. Additionally, we played a key role in calculating support based on their marital standard of living, taking into consideration income from the business and all other assets. This process took more than three years to complete.
After concluding the forensic accounting process, the forensic accountant provides financial information that enables the attorneys and parties to make informed decisions for a settlement. Detailed reports, master spreadsheets, and asset division proposals empower everyone involved. The parties can weigh their options and consider the financial implications of different scenarios. The forensic accountant plays a pivotal role in guiding such a case through complex decisions. This ensures the proposed settlement aligns with financial realities and is sustainable for both parties involved.
Forensic Accounting in a Collaborative Divorce1
In a collaborative divorce,1 a forensic accountant will act as a joint neutral accountant for both parties. However, as the net worth escalates, each party may opt for their own forensic accountant, which can introduce a dynamic shift in the collaborative process.
Forensic accountants do more than crunch numbers on high net-worth divorces. Their work also leads to fair resolutions and informed decisions, which is especially true in the complex world of wealth division during divorce proceedings.
My firm works on divorce cases involving all aspects of complex financial issues. This includes cases that settle, require litigation, and collaborative cases. Our experience enables us to provide accurate information in a timelier manner than most forensic accounting firms, thus making our clients’ cases more affordable and reducing stress.
My office is located at 28441 Highridge Road, Suite 110, Rolling Hills Estates, CA 90274. You may call (301) 378-6606 ext. 1 to schedule a confidential consultation.
This article was originally posted on Collaborativedivorcecalhttps://collaborativedivorcecalifornia.com/the-role-of-a-forensic-accountant-in-a-high-net-worth-divorce/
1.Collaborative divorce “is a legal process through which couples who have decided to separate or end their marriage work together with a team of collaboratively trained professionals, including lawyers, divorce coaches, and financial professionals, to achieve a settlement that meets the needs of both parties and their children without the need for litigation.” (Wikipedia)