There are many different definitions of income that can be used in divorce and family law cases. Local law will play a big part in defining income, but in more complicated cases, other definitions may come into play. A forensic accountant can help the attorneys and the court understand the various types of income and why they should be included or excluded from income calculations.
The Internal Revenue Code is often a starting point for quantifying income in divorce cases. But experienced family lawyers know this is only the tip of the iceberg and doesn’t cover many of the unusual situations that could arise in cases with complicated financial scenarios.
In simpler cases, wage income and business income will be straightforward and will form the basis for calculating child support and spousal support. Undistributed income from a business venture may be an area of contention, but local laws often provide at least basic guidance on including such income in support calculations.Continue reading
When a spouse knows that a divorce is imminent, there are obvious steps to secure his or her financial future. First, a competent divorce attorney must be retained. Next, the division of assets and income should be considered. Yet when it comes to the financial details, clients often do not know what to do.
An uncertain financial future may scare the client, but the fear of the unknown makes it more important than ever to focus on protecting the client’s financial interests. The divorce attorney can provide this list of simple (but sometimes overlooked) tips to the client to help aggressively fight the financial case in divorce court:
1. Secure funds for living expenses, attorneys, and other professionals. A spouse who does not control the family’s finances may find it difficult to get access to funding during the divorce. It is not uncommon for the moneyed spouse to cut off access to money to force a quick (and possibly unfair) divorce settlement. It is important for you to legally get access to and secure money that will only be available to him or her. Relying solely on family court to award funding for living expenses and divorce professionals is far too risky.Continue reading
Tracy Coenen talks about the taxability of alimony versus child support, including a brief discussion of the IRS rules. These rules are still in effect for 2017 activity, but may differ based on possible changes to the tax code for 2018 and thereafter.
One of the chief concerns in a divorce or child custody case is identifying the true income of one or both of the parties. It is not unusual for such a case to include allegations of hidden income or assets. It is common for a closely held business to suspiciously encounter declining sales and profits following the filing of a family law case.
In each of these instances, properly determining the income of the party is critical to getting a fair and equitable settlement, maintenance award, or child support award. Until you have the correct numbers, the attorney may find it very difficult to decide what is fair or in the best interest of the client.
How can a spouse or parent with little to no direct access to the other party’s financial records prove that there is undisclosed income? What happens if the financial records obtained during discovery appear woefully incomplete? A forensic accountant is the logical choice to help reconstruct financial records, estimate earnings, and analyze fine details of financial documents to prove or disprove income claims.Continue reading
Potential clients in the process of divorce often contact me because they are concerned about hidden assets. Often the spouse had a history of financial dishonesty throughout the marriage, or his or her behavior became suspicious around the time divorce was filed. It is not uncommon for there to be a sudden lack of money once divorce is filed. Previously, it was easy to pay the bills and pay for vacations and other extras. Now it’s hard to find money for even the basic necessities.
When a spouse is suspected of hiding money and other assets, professional help is required. But what kind of help?
It depends. There are two types of help that you can get for this aspect of a divorce case. The first is a forensic accountant who will essentially trace money through accounts, follow the paper trail, and determine if there is any missing money. This work is heavily rooted in the documentation you obtain. I can’t trace the money without the documents. Continue reading
Divorces and child support cases often focus heavily on financial issues. Whether the parties to a case are of modest means or great wealth, both sides want their own version of what is fair. Unfortunately, this can lead one or both parties to hide income and assets. With the help of a financial expert, counsel can identify income and assets that might otherwise go undiscovered, and hopefully reach an equitable end to a divorce or child support case.
Sources of income and assets owned can be identified with the right documentation. Attorneys need to be familiar with some of the most common financial documents so they know what to request. Attorneys with financial knowledge can also help identify issues that may need further analysis in a family law case.Continue reading
When parties are divorcing, it is not unusual for claims to be made about declining income or lack of assets. Tracy talks about some of the documents that could be used to refute these claims and to prove the existence of assets or streams of income.
When a divorce involves a business, we often ask for a copy of the general ledger, which is part of the company’s accounting records. The general ledger includes the details of transactions for a specified period of time. What can we find in the general ledger? Tracy Coenen explains in this video: