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When a couple decides to divorce, there is a division of all their assets. This often means selling off those assets and sharing the proceeds.
Sometimes this leads to one person arguing that an item is worth more, or at least more than what another person is claiming. This can lead to the hiring of a forensic accountant in order to help set fair values for assets being sold.
What is a Forensic Accountant?
A forensic accountant is someone who investigates incidents of fraud, bribery, money laundering, and embezzlement by analyzing financial records and transactions, tracing assets, and more.
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The Role of Forensic Accounts in Divorce Cases
It isn’t only law enforcement agencies that hire forensic accountants, individuals undergoing divorce tend to hire them to investigate financial discrepancies in both personal and business finances in a divorce.
They can help in a divorce case in the following ways:
1. Determine Joint Assets and Liabilities
In most marriages, one person often handles the finances, which might be detrimental if you decide to get divorced. When a divorce is impending, the opposing party could try to conceal assets in order to obtain a better settlement.
A forensic accountant might be hired to locate and document that all shared assets and liabilities are in order. His or her opinion improves transparency, ensuring a fair distribution of resources.
2. Appraise Assets, Businesses, and Properties
In forensic accounting, the explanations for the statistics are just as crucial as the numbers themselves. Forensic accountants examine and validate the financial information the appraiser presents during an appraisal.
An accountant assists in valuing assets, businesses, and buildings after a divorce so that they can be divided equitably between the two parties.
3. Track Down Hidden Assets
It's not uncommon for spouses to try to hide assets during a divorce. Unknown assets can never be divided, in the end. You may be sure that any concealed assets are accounted for by working with a forensic accountant.
Many techniques are used, including looking into tax records and the opposing party's spending habits. The inquiry can be used to identify inconsistencies between what they report and what they actually own. A forensic accountant can find, among other things, assets owned by phony corporations, unreported income, and fictitious debt.
4. Assess the Amount of Child and/or Spousal Support
The spouse who earns more may understate their income during a divorce in an effort to reduce the amount of alimony and/or child support due.
In order for the court to compute spousal support and child support payments correctly, forensic accounting services can help unearth hidden assets and ascertain the true income amount.
5. Analyze the Use of Joint Funds During the Divorce Process
Husbands and wives frequently maintain a joint bank account. However, if you've made the decision to get divorced, neither you nor your spouse should make significant withdrawals from your joint account without keeping any sort of financial records.
After a divorce, you should maintain your money in the bank to preserve a paper trail. The forensic accountant can evaluate how each party used the shared funds during the divorce proceedings. This will make the distribution of assets easier.
6. Plan How to Divide Up Assets and Liabilities
A forensic accountant can help you unearth vital financial data that could change how your assets are ultimately divided. The accountant will objectively examine each item listed in the marital property list and account for all liabilities.
Their objective will be to plan the most effective strategy to equitably distribute these assets and liabilities between you and your divorce attorney.
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Managing Money in a Divorce
Divorces do come with a load of exhaustion on the parties involved however you don’t have to be overwhelmed and penniless by the end of it, get knowledgeable on how a forensic accountant can help you so you don’t lose more than you have already lost.
Divorce is hard on your finances. Luckily there are some strategies you can use to help you out.
I have many free resources available via my resource page that can help you to budget your way through the process. You can also check out my mini financial planner. This small planner has everything you need to get your finances in order and you can check it out on my Etsy page via my Instagram!
Get ahead of it all today, and listen to how important they are during a divorce in Episode 111 of The Money Exchange Podcast.
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