What is a forensic accountant and will I need one in my divorce?
A friend of mine got divorced last year, and she told me that her lawyer needed to hire a forensic accountant to assist with her case. Is this something common that I will have to deal with as well? If so, are they expensive?
Depending upon the specifics every case, family law attorneys may need the services of a forensic accountant. Usually they are needed when a certain level of complexity is reached in a divorce case related to the scenarios below.
Analysis of cash/income flow:
When one or both spouses are self-employed, attorneys will need an income analysis to determine the correct amount of child support. For a parent who may be paying support, a forensic accountant can protect them against incorrectly calculated high income amounts by the court. For the parent receiving support, the forensic accountant can determine whether the other parent is hiding income or running personal expenses through the company.
Same as above when related to spousal support. A forensic accountant can also help determine a marital lifestyle calculation which helps with amounts.
Spouses who own/operate a business (or are executives in large companies) will often face claims that the business or the partnership interest is community property. A forensic accountant will help determine value and settle community vs. separate property claims.
Separation of community and separate property money
When separate property money is brought into a marriage, or community and separate property is mixed, forensic accountants are necessary to determine origination of the money to a separate or community source. This is important if separate property has been used to purchase an asset or pay a business expense.
Most experienced forensic accountants charge a deposit to begin work. We usually see a range of $2,500 to $6,000, which is dependent upon each case and the complexity of the specifics involved. The good news – a lot of times, they end up saving the client time and money, as their work oftentimes eliminates the need for unnecessary court litigation or trial.