The Role of Forensic Accounting in an Illinois Divorce Case 

 Posted on November 17, 2022 in Divorce

No matter how long spouses have been together, getting a divorce can be painful and rife with emotional anguish and sadness. For most marriages to succeed, a foundation of trust and honesty must be adhered to by both spouses. Unfortunately, trust and openness can rapidly erode when a marriage breaks down and the possibility of divorce is brought to the table.

Aside from the emotional implications, the financial consequences of a divorce can be challenging to deal with and accept. In essence, marriage is a financial partnership. As a result, when divorce proceedings begin and finances need to be distributed, people may resort to hiding assets from their spouse to prevent them from falling into their spouse's hands.

If you are getting divorced and believe your spouse may be hiding assets, consider hiring an experienced divorce attorney with knowledge and experience in forensic accounting. This service can be implemented to identify assets your spouse may be hiding from you. When you have a Wheaton, IL divorce lawyer who truly cares about your financial future, you are more likely to receive a fair divorce settlement.

What is Forensic Accounting?

In the context of a divorce, a forensic accountant is an accountant who possesses and applies exceptional investigative skills to collect and examine financial documents in order to locate hidden assets or income. Financial documents may include tax returns, real estate records, bank statements, court documents, insurance policies, job applications, and more.

An attorney or individual party may request the services of a forensic accountant. Hiring a forensic accountant can help ensure an equitable division of assets and provide a more complete picture of the couple’s finances.

Why is Forensic Accounting Useful?

A forensic accountant is helpful in many different ways, including:

Identifying Hidden Assets and Income

This is the primary reason most people hire a forensic accountant. An individual may have a strong suspicion that his or her spouse is hiding assets or income to avoid having to split them during the division of marital assets.

This typically occurs when one spouse has primarily handled the finances and the other has limited knowledge about the couple’s overall financial situation. A forensic accountant may be able to find undisclosed bank accounts, properties, investments, and other financial resources by analyzing financial statements, tax returns, credit reports, bank records, and much more.  

Valuing Marital and Business Assets

Forensic accounts can accurately value real estate, businesses, and even art or jewelry collections. The more complex marital assets are, the more a forensic accountant can help untangle the value of the couple’s assets. If there are very complex assets, like an international, multi-location business, it is essential that the forensic accountant has the experience necessary to value such assets accurately.

Businesses or other properties owned by the couple will need to be accurately valued using financial data, business records, and property records. A business that one spouse claims is worth only $800,000 might, in fact, be worth considerably more. Spouses who are determined to hide assets often do so through their businesses.

Calculating Child Support or Spousal Support Payments

To accurately determine amounts of spousal support and child support, the income of both spouses must be correct. A forensic accountant can determine and identify each spouse’s actual income. A spouse who is trying to hide assets may have deferred a raise or bonus until after the divorce is final to avoid paying his or her spouse half of that income.  

Unraveling Shoddy Bookkeeping Practices

A forensic accountant can trace both income and expenses as he or she separates personal and business finances. This can be especially important when both spouses own businesses. Many small businesses are guilty of sloppy bookkeeping and commingling business and personal expenditures. This can have a significant impact on the bottom line. A forensic accountant will analyze all the financial records to determine actual expenses and income.

Providing Expert Testimony

After an exhaustive investigation into one or both spouses’ finances, a forensic accountant may be asked to provide expert testimony during the divorce trial. This type of testimony can be pivotal during divorce proceedings, providing an objective analysis of a couple’s finances.

Judges often rely on a forensic accountant’s expertise to make necessary decisions regarding child support, spousal support, and marital asset division. A professional, credible forensic accountant can decisively affect the outcome of a divorce.

Reviewing Financial Reports from Opposing Counsel

Suppose your spouse hires a forensic accountant of his or her own. You need an equally trained forensic accountant to help you understand the results and counter the findings when necessary.

Advising on Potential Liabilities

Your forensic accountant can help you understand how the division of marital assets can have tax implications for you, now and in the future. He or she can also prepare you for any future liabilities you may be responsible for.

Tracing the Ownership of Assets

There may be disagreements regarding whether an asset is a marital asset or a separate asset. A forensic accountant can trace the asset back to its origins and help settle these disputes. In situations where an asset, such as a house, was owned by one spouse prior to the marriage, and marital assets were used over the years to make repairs to the house, the ownership can become muddled. A forensic accountant can help determine what percentage of that separate asset might actually be a marital asset, subject to division.  

Tracing the Dissipation of Marital Assets

If one spouse has reason to believe that the other has dissipated marital assets, a forensic accountant can trace these expenditures. Dissipation of marital assets means one spouse used marital funds for items that the other spouse had no knowledge of and would not have approved. Gambling, purchasing drugs, or buying lavish gifts for another person would all fall under the dissipation of marital assets.

Is Hiring a Forensic Accountant Worth the Cost?

According to Forbes, hiring a forensic accountant can be pricey, with services often reaching $10,000 or more. But, while expensive, their services can have significant implications on various issues in a divorce. Financial matters in divorce cases can be highly contentious, so having a financial specialist in your corner can be incredibly beneficial.

Contact a DuPage County, IL Forensic Accounting and Asset Tracing Divorce Attorney

If you suspect your spouse is hiding assets from you, consult with the highly knowledgeable Wheaton, IL forensic accounting and asset tracing divorce lawyers at The Stogsdill Law Firm, P.C.. Our firm is one of the most prestigious in the area. We are a large law firm with substantial resources and extensive experience. Call 630-462-9500 today for a complete and comprehensive consultation.