What on Earth is a Forensic Accountant, and Why Do I Need One in my Dissolution?

Posted almost 5 years ago. 2 helpful votes

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1

The What

A forensic accountant is typically a CPA hired to assist with the valuation of businesses, examination and/or reconstruction of financial records, analysis of difficult tax situations, and computation of someone's income. Forensic accountants tend to be used in cases where money and property are highly contested, when a personal or small business needs to be valued and divided, or when there are a lot of high-value assets.

2

The How

Forensic accountants are retained/hired under a variety of circumstances, but they are most frequently appointed by the Court as its expert in a contested case. In that situation the accountant, called a "730 expert," is supposed to be a neutral person called upon by the Court for a specific person. At other times, your attorney might recommend that you hire your own forensic accountant to act as your expert witness in a trial. Parties sometimes opt to jointly retain a forensic accountant to assist them in a mediated dissolution setting or with their taxes.

3

The Why

Forensic accountants provide many important services to parties who need to value and divide their assets. If one party believes the other has squandered or hidden money prior to filing for dissolution, or there is an accusation of someone hiding his or her actual earnings, a forensic accountant can determine and account for this money. Additionally, forensic accountants will value businesses and calculate separate versus community property interests in assets. In addition, forensic accountants have the expertise to guide parties through the division of their assets and explain the differences between each asset and its particular value. For example, if one party wants the house and the other wants to keep his or her retirement, even if at the present they are equally valued, their future values will be dramatically different. They an also provide information regarding the various tax implications and advise on the best method of filing taxes during and after the dissolution.

4

The When

Often times it actually saves the parties money to retain a forensic accountant early on in their dissolution of marriage or domestic partnership case. A forensic accountant can dispel unrealistic expectations (where one party thinks the nearly bankrupt business is still a multi-million dollar company), provide guidance in order for the parties to maximize their tax savings, and cut back the need for attorneys to compel formal discovery (demands for certain documents or answers to specific questions). It's often times a good idea to consider whether or not a forensic accountant is appropriate early on in the case rather than after the matter is set for trial.

5

The Who

Most counties turn to the same few local forensic accountants in dissolutions. If you are considering hiring a forensic accountant, check out the accountants most frequently used in your area. Not only do they have a good reputation with the Court, but those people are also familiar with the court system itself and usually have a relationship with the local judges. You are almost always better off using someone already established as an expert with your judge rather than an unknown, no matter how good of a reputation he or she may have elsewhere.

Additional Resources

Law Office of Cristin M. Lowe

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