In a contentious divorce, there are really only a few things that spouses can fight over: children, alimony, money, assets and debts. Often the fight over children is due to the amount of child support that one party owes the other – so a key issue can be determining the actual incomes of each party and this same issue applies to alimony (also called spousal support). The issues that surround money, assets and debts involve: 1) where money and assets may be hidden, 2) how were debts incurred and where they are truly debts, and 3) an accurate valuation of all marital assets and debts. Determining income, locating money and assets, and true valuations are where a forensic accountant can be well worth the expense associated with this accounting.
In Florida, the general rule is that all assets that were acquired and all debts that were incurred during the marriage are presumed to be “marital” and that there is a basic presumption that marital debts and assets will be divided equally between the husband and wife.
In some cases, the process of equally dividing assets and debts as well as determining the parties’ income is relatively simple due to each spouse working solely as a W-2 employee, the length of the marriage, the lack of investment accounts, and the amount of marital assets and debts.
However, in other cases where one or both is self-employed; or operates through a series of legal entities such as a Florida Limited Liability Company (LLC) or a Florida Corporation; or is employed by family members in a closely held business – determining a spouse’s income can be extremely difficult and time consuming.
Also more issues arise when the parties have much more complex financial portfolios such as where a spouse has stock options and/or restricted stock (with some vested and some not), partnerships with non-familial individuals, real property or other assets held in trust, or rare art and other unique collectibles.
When cases with complex financial issues do settle, it is extremely important to properly word the settlement agreement in order to avoid financial and tax implications which can arise post-dissolution as some accounts vest as well as due to increases/decreases in other account values which may or may not have been anticipated. New Horizons Law, P.A., Michael J. Costantino, Esq. is cognizant that the long-term financial and tax impact of divorce settlement agreements need to be drafted with the assistance of advice from forensic accountants.
If your case does not settle, a forensic accountant can be essential to convince a family law judge to rule in your favor on the key financial issues stated above –child support, spousal support, hidden money and assets, debts, and an accurate valuation of all marital assets. One huge benefit is that the forensic accountant is able to testify concerning these financial issues as opposed to the client being exposed to a tough cross-examination with respect to valuations.
New Horizons Law, P.A., Michael J. Costantino, Esq. recognizes this difficulty in accurately valuing marital assets and debts for our clients so we are proactive in taking the time to assist our clients to obtain proper valuations from forensic accountants.
It can be difficult for the ordinary individual to fully understand the need for a forensic accountant because she or he may not know all of the “dirty tricks” that their spouse may use in divorce proceeding in order to gain an upper hand. Therefore – see New Horizons Law, P.A., Michael J. Costantino, Esq.’s blog titled “Dirty Tricks” for more information.