Sometimes during the divorce process a spouse can take on unscrupulous practices (e.g., hiding money from his partner). This can be done for a number or reasons, whether the spouse is trying to guard his own money, or simply trying to make sure his partner suffers financial loss as some form or humiliation. Whatever the reason, sometimes a spouse has to take it into their own hands to ensure they are getting everything they are entitled to.
This is where forensic accounting comes in. A forensic accountant can look into financial practices of your soon to be ex-spouse and see how much money he makes and how much money he spends (or at least claims to spend) and sees if it all adds up with the share you are being given. Essentially, a forensic accountant can work together with your attorney to make sure you are not being cheated out of your fair share of money.
If your spouse is hiding money from you, he will most likely do it by understating his assets, income, or the value of other finances such as a business they own. There are some patterns that help in identifying when a spouse may be engaging in such practices:
- Unreported cash transactions
- Large one-time purchases write-offs
- Self-dealings and inter-family dealings
- New or hidden bank accounts
- Unreasonable owner salary levels
- Sudden decrease in gross income
There are plenty of other examples, but basically all lead to the analysis of whether the spouse could be supporting themselves at the level of income and expenditures they are claiming. If there is less money going in than is being spent, that may be an indication that your spouse’s financial records may not be revealing the whole truth.
It would definitely be a good idea to consult a divorce attorney before hiring a forensic accountant. The accountant normally does not work by himself, but usually works with your attorney as a team, so that they can coordinate what they are looking for and interpret what they have found. Remember, your attorney will make sure that your interests are always represented during the divorce process, especially if the matter goes to court.