Forensic Accountants are accountants that use special skills to investigate and analyze financial transactions in many types of cases. In divorce cases, they are used for four (4) primary purposes.
1. Determine Cash Flow for Support for Child and Spousal Support
One factor of support is income. If you are an employee, “income” is easier because you get a W-2 from your employer at the end of the year and you get pay stubs. With self-employed individuals, it’s complicated. Income is not only the money received by the business owner. For child support purposes, “income” is defined in California Family Code 4058 and is “commissions, salaries, royalties, wages, bonuses, rents, dividends, pensions, interest, trust income, annuities, workers’ compensation benefits, unemployment insurance benefits, disability insurance benefits, social security benefits, and spousal support actually received from a person not a party to the proceeding to establish a child support order under this article.” It is also “Income from the proprietorship of a business, such as gross receipts from the business reduced by expenditures required for the operation of the business.” In addition, “income” can be “employee benefits or self-employment benefits, taking into consideration the benefit to the employee, any corresponding reduction in living expenses and other relevant facts.” A lot of business owners pay for personal expenses thru the business-like gym memberships, car payments, cell phone payments, Dodger tickets, etc. All those “payments” are considered income available for support.
2. Business Valuation
Forensics are hired to value businesses. They can value almost any kind of business. I have represented lawyers/doctors and we had their law firms or medical practices valued. You would be surprised how much businesses are worth depending on the nature of the business and the demand for its product or service. Businesses also have “goodwill”.
3. Tracing Separate and Community Property
When you have co-mingled (“mixed”) your separate and community property, you may need to hire a forensic to trace which is which. Perhaps you received an inheritance and unknowingly deposited it into a joint account. Maybe you received a lawsuit settlement in invested it in your joint investment account. The forensic accountants can “trace” the funds so you don’t have to share them with your soon to be ex-spouse.
4. Uncover Hidden Assets
The forensic accountants analyze everything and usually they find “forgotten” or intentionally concealed finances. In one case we found out a person had a second family in another state from looking at the banking records.
For more information on how our team of experts can help you in your divorce case, please call Certified Family Law Specialist Denise Lite at 877-317-8080. Your case and your future deserve the very best!