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Why you may need a forensic accountant for a high-asset divorce

On Behalf of | Aug 7, 2023 | Community Property Division

Divorce proceedings can become quite challenging in California, where the cost of living is high. When significant assets, investments and complex financial structures are at stake, the role of a forensic accountant may become crucial in helping ensure a fair and equitable distribution of assets.

These financial professionals are often hired to uncover hidden assets, evaluate the value of businesses, assess the authenticity of financial records and provide testimony in court.

Unraveling complex financial structures

In high-asset divorces, couples typically have extensive financial portfolios, including multiple properties, investments, businesses and other valuable assets. Untangling such intricate financial structures requires a professional. Forensic accountants are adept at:

  • Dissecting complex financial documents
  • Tracing financial transactions
  • Identifying any attempts to conceal assets

They play a crucial role in helping ensure all assets are accounted for and fairly divided between the parties involved.

Accurate business valuation

One of the most challenging aspects of a high-asset divorce is determining the value of businesses owned by either or both spouses. In California, community property laws govern the division of assets acquired during the marriage. This means that the assets acquired during the marriage by either spouse are up for division between the spouses upon divorce.

A forensic accountant can assess the worth of a business by considering its assets, liabilities, cash flow, market position and future potential. Their objective evaluation can ensure a just distribution of business interests during divorce.

Tracing hidden assets

Unfortunately, not all divorcing spouses are entirely transparent about their financial holdings. Some may attempt to hide assets to reduce their spouse’s share during a divorce settlement. A forensic accountant’s opinion can be invaluable in such cases, as they are trained to follow paper trails and uncover hidden assets or income streams. By bringing undisclosed assets to light, they can help safeguard the integrity of the divorce proceedings.

Forensic accountants’ ability to navigate complex financial landscapes, uncover hidden assets and provide accurate valuations makes them essential in helping ensure a fair and equitable division of wealth. Therefore, couples going through a high-asset divorce should strongly consider enlisting a forensic accountant’s input alongside legal counsel to help ensure a favorable outcome.