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Forensic accounting investigation and high-asset divorce

Divorce is stressful. Key issues revolve around money and children. Fair asset division can be particularly stressful in a high net-worth divorce. In a low-asset divorce, both parties have a pretty good idea of their assets, and often, they can settle differences amicably if both parties are willing to be fair.

High-asset divorce, on the other hand, can be unbelievably complex. Assets transform into stocks, bonds, art, jewelry, annuities, insurance, cash, and multiple checking and savings accounts, and they can flow through a complicated series of businesses until it seems the first company swallows the tail of the last company. Generally speaking, one spouse usually maintains financial knowledge and control while the other spouse trusts that information he or she receives is the real financial picture of the couple.

Call in the accountants

Unfortunately, not all marriages are on an equal financial footing, and one spouse may suspect that the other is hiding assets. High-asset divorces can involve several specialists working under the principal attorney to coordinate part of the discovery process. A key player in this network is often a team of forensic accountants.

Forensic accounting is a niche area within the realm of Certified Public Accounting. A  forensic accountant, or CFF, is a CPA who has studied and received certification to perform the complex financial analysis of financial transactions that, depending on the length of the marriage, can extend back through years of convoluted dealings. Complicated financial setups are not necessarily illegal; however, they are attractive for those who wish to disguise financial sleight-of-hand they want to hide from either the IRS, a business partner or an unwary spouse. The very complexity of these torturous setups requires expert analysis to tease out where the money has gone.

Trust does not preclude verification

Even in a non-contentious high-asset divorce, each party would be well-advised to request a forensic investigation from their legal representative. The term "trust but verify" is well-applied to a high-asset dissolution. Those spouses with a high net-worth profile sometimes realize it is in their financial interest to separate as amicably as possible. When asset aggression becomes entrenched, the dissolution can become a costly proceeding in both cold cash and colder emotions.

Preparation for couples going into a high-asset divorce means expecting their legal counsel to involve financial expertise and even court-ordered surveillance if there is reasonable suspicion that one spouse is attempting to make an unfair play to retain a larger share than the person deserves. Forensic accountants are well-trained in noticing oddities that don't quite fit the expected picture. Given the gravity of their findings, CFF results might indicate deeper delving is necessary to uncover what may be a clever attempt at divorce asset fraud. Courts do not take kindly to this illegal and vindictive behavior. 

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