Divorce can become significantly more complicated when a couple’s finances involve businesses, multiple accounts, investments, unusual compensation, or questions about whether property is community or separate. In these situations, financial records may tell only part of the story. A forensic accountant may be used to analyze the financial information and help clarify issues involving income, property, tracing, and reimbursements.

Understanding Complex Income

Determining a spouse’s income is not always as simple as looking at a paycheck. This is particularly true when a spouse is self-employed, owns a business, receives bonuses, or has other forms of compensation.

A forensic accountant may analyze business and personal financial records to develop a clearer picture of income. This information can become important when child support or spousal support is at issue.

Fluctuating income can also require closer examination. Bonuses, commissions, stock-related compensation, and business earnings may vary considerably from year to year. Reviewing a broader financial history can help determine whether a particular period accurately represents a spouse’s financial circumstances.

Tracing Community and Separate Property

Another common reason for using a forensic accountant is tracing property.

California divorces sometimes involve accounts containing both community and separate funds. For example, a spouse may have owned an account before marriage but continued depositing money into and withdrawing money from it during the marriage.

When funds have been mixed over many years, determining their character can become complicated.

A forensic accountant can examine account statements, transaction histories, and other records to trace funds and help determine their source. Similar analysis may be useful when there are numerous bank or credit-card accounts or when one spouse claims a right to reimbursement.

The quality of the available records can be particularly important. Missing statements or incomplete financial histories may make tracing substantially more difficult.

Valuing a Business or Other Significant Assets

Business ownership can create some of the most complex financial questions in a California divorce.

When one spouse owns an interest in a business, determining its value may require specialized financial analysis. An accountant may examine financial statements, tax returns, business records, compensation, and other information relevant to the business.

Other professionals may also be appropriate depending on the property involved. Real estate may require an appraiser, retirement benefits may require specialized pension analysis, and complicated tax questions may call for tax expertise.

The goal is not necessarily to involve an expert in every divorce. The complexity of the financial issues and the cost of obtaining expert assistance should both be considered.

Knowing When Financial Expertise May Matter

Many California divorces can be resolved without extensive expert involvement. Others involve financial questions that cannot easily be answered from ordinary financial disclosures alone.

When business interests, complicated compensation, tracing questions, retirement benefits, or disputed property values are involved, specialized financial analysis may help the parties and the court better understand the financial picture.