It is a sad fact of life, but matrimonial disputes happen each and every day. Should these problems arise, it is important to seek out expert assistance at your earliest opportunity to ensure your interests are protected.
You may not think it, but forensic accountants can play an important role when trying to resolve matrimonial disputes and during divorce proceedings. This is because they are integral to ensuring equitable distribution of assets, such as cash and property.
How are Forensic Accountants Appointed in Matrimonial Disputes?
Forensic accountants are commonly appointed in matrimonial disputes to act on behalf of a singular party (as a party-appointed advisor or expert witness), or as a representative of both parties as a Single Joint Expert (SJE). The latter role in particular can offer cost-saving benefits, while potentially enabling a smoother process than otherwise might have been achieved.
If the dispute is acrimonious, a forensic accountant can be integral in facilitating a fair distribution of wealth. This is because they are specially trained not only to review the information that is readily available, but also seek out what is being withheld. Their objective will be to ensure that there is no understatement of assets or income, and uncover attempts by either party to conceal what they own.
Forensic accountants can also help resolve marital disputes after the final settlement has been reached. This is in situations where one or both parties have not acted in accordance with the financial order, or are seeking to make amendments to the financial order.
The Role of Forensic Accounting in Matrimonial Disputes
A forensic accountant can be instructed at any point during matrimonial disputes. This includes before either party has sought formal legal assistance and are merely discussing the value of their assets. Taking advantage of forensic accounting at this early stage can pave the way for a smoother legal process when the time comes.
There are many different roles a forensic accountant can take when it comes to matrimonial disputes, including:
Valuation of Business Assets
When it comes to valuing a company, forensic accountants can use several factors as a basis for their assessment. These include projected earnings/profit levels, past performance, asset holdings and market data on competitors that have a similar operational makeup.
Forensic accountants can also be used to advise if, and how, the business can be restructured to enable the extraction of funds when a financial settlement is reached.
Tax Issues
Capital Gains Tax (CGT) in particular is an important issue in the disposal of assets once a financial settlement has been agreed. Careful planning is needed to ensure that the impact of CGT can be minimised as far as possible, so neither party gets hit by a large tax bill once the transfer of assets or extraction of cash has taken place.
Asset Tracing
A crucial role of forensic accountants in a marital dispute is to estimate and seek out hidden assets. Many types of assets are often concealed during these disputes, especially when it comes to divorce. Common types of hidden assets include:
- Mutual funds
- Stocks and annuities
- Insurance policies
- Cash
- Bonds
There are several ways in which assets can be concealed. While more extreme cases involve the use of offshore accounts, a common scenario will see one party giving their assets to a close friend or family member to hold on to temporarily. They may also try to claim they owed the person money, only to take back ownership of the assets after the financial settlement has been agreed upon.
A forensic accountant will use a variety of techniques to uncover hidden assets, including:
- Reviewing tax returns
- Observing business transactions if one of the parties owns their own company, and noting if there has been any recent write-offs
- Asking about a spouse’s habits to determine a potential location where assets may be hidden
- Analysing financial account statements, such as current accounts, savings accounts and money market funds
It has also been known for seemingly unrelated companies to be set up with the sole purpose of concealing assets or income. In these circumstances, a forensic accountant can help raise questions as part of their investigations, which can then be followed up by a lawyer.
Expert Witness
If matrimonial disputes or divorce proceedings are ever contested in court, a forensic accountant is able to appear as an expert witness to offer their testimony.
Points to Consider
While the precise role of a forensic accountant can vary due to the individual circumstances of a matrimonial dispute, it is important to understand that their overriding duty is to the Court. As an expert, a forensic accountant must be able to demonstrate independence. If they are engaged as an advisor, they may be able to offer more hints and tips to their clients, however an accountant who has previously been appointed as an advisor may not subsequently be able to act as an expert.
Once the forensic accountant has produced their report, it will not be possible to raise new questions as part of the same instruction. It is therefore essential to clarify the exact scope of the investigation beforehand.
How Inquesta can Help
Although enlisting the help of a forensic accountant to deal with marital disputes may seem excessive at first, the potential benefits at stake are huge. Having a specialist forensic accountancy firm, such as Inquesta, in your corner could help protect your settlement from unscrupulous practice.
We have amassed decades of experience in assisting clients in getting the outcome they deserve, and make it our mission to always put the needs of our clients above all else. This means you can be completely confident that everything will be taken care of for you.
Once we have been instructed, we will leave no stone unturned during our investigation, so you receive the most thorough report possible. We can also negotiate with the other party on your behalf, and have a great deal of experience in providing evidence in court under cross-examination.
For more information about how Inquesta can help you, contact a member of our team today or request a free, no obligation, consultation.