Using a Financial Expert in a Family Law Case

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Family law cases involving complex financial issues often require the assistance of a financial expert for the following issues:

  • Preparing a financial disclosure, including creating a marital balance sheet
  • Comparing balance sheets from period-to-period to evaluate changes in assets and liabilities
  • Analyzing financial disclosures or affidavits prepared by the spouses
  • Calculating the historical income of the spouses
  • Determining income (or the ability to pay) in order to calculate support
  • Determining the standard of living (or the need for support)
  • Valuing business entities or other assets (such as real estate, pensions, and the like)
  • Identifying assets and determining whether they are non-marital (separate) or subject to division (marital or community)
  • Tracing and finding funds or other assets
  • Analyzing claims of dissipation, wasteful spending, or fraudulent conveyance
  • Evaluating the income tax impact of various scenarios
  • Assessing the work of an opposing financial expert
  • Other litigation assistance, such as assistance with drafting discovery demands and interrogatories or preparing for the depositions of individuals with financial information

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Coming Up With Your Divorce Budget

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It can be difficult to come up with a budget for your future living expenses when getting divorced. Most people don’t know how much they have been spending on various things like clothing, groceries, and dining out. It can also be difficult because we need to consider the spouse’s reasonable needs in the future. Things can become even more complicated if the earnings of the parties aren’t sufficient to support two households at the same level they had during the marriage.

Nonetheless, budgets or projections of future spending should be prepared, and a financial expert should take steps to verify the figures and determine if they are reasonable.

What historical period should be evaluated when creating the budget? It is typical to evaluate one to five years of data, but there is no hard and fast rule for the time period that should be analyzed. Contrary to the position advanced in some divorces, future needs are not necessarily based only on expenditures in the last year of marriage. What if spending had been increasing by 10% per year for each of the last five years of the marriage? A case could be made that future needs should reflect a similar increase. Continue reading

Evaluating Tips About Insider Fraud

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Insider fraud is most commonly detected in companies through a tip, either from an employee, a customer, a vendor, or an outside party. Anonymous hotlines are excellent tools for reporting fraud, but management must have a plan for evaluating these tips.

Some tipsters are okay with revealing their identities from the start. Others fear retribution or damage to their own reputations, so they prefer anonymous reporting. Just because a tip is anonymous, that does not mean it is any less credible than an allegation made by someone who is open about her or his identity. However, if someone is willing to reveal her or his identity when providing a tip, it may lend additional credibility to the information.

Employees are sometimes worried that a hotline or other anonymous reporting mechanism might lead people to make false reports about others. While this does happen sometimes, those reports usually appear suspicious and are quickly identified as meritless. Continue reading

Using Fixed Fees in Forensic Accounting Engagements

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Nearly all of my work is done under fixed fee arrangements. My client and I determine the scope of a project (what documents will be used, what analysis will be done, what time period is covered, etc.) and I quote them a fixed fee for my analysis and expert report. In this video, I explain how I calculate and explain the fixed fee structure to a potential client.

Investigating Unreported Cash Sales

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How do you investigate fraud in a cash business? It is difficult because cash leaves no paper trail. But Tracy Coenen has some techniques she uses to try to uncover unreported cash sales. She gives examples including restaurants and laundromats. Tracy mentions some of the things she analyzes like credit payroll records, equipment purchases, and credit card sales.

How Not to Suck at Divorce Podcast

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Today I have the honor of being the guest on one of the most popular divorce podcasts…. How Not to Suck at Divorce with Morgan Stogsdill and Andrea Rappaport. Episode 20 is all about Divorce Finances, Forensics & Fraud.

I love how they describe me:

Today’s episode is like divorce meets CSI as we welcome Tracy Coenen. You may have seen her on CNBC On the Money, CBS, NBC, and in the Wall Street Journal. Tracy is a certified public accountant, certified in financial forensics, a master analyst and fraud investigator. If you’re wondering what all this means, Tracy finds money. Money that has disappeared that you want back.

What did we talk about? Continue reading

Kelly Clarkson Divorce Settled

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More celebrity divorce news. The nearly two-year divorce fight between Kelly Clarkson and Brandon Blackstock has been settled. Kelly will have primary custody of their children, and Brandon will have them one weekend a month.

Kelly will keep Warren Peak Ranch in Montana (worth about $17.75 million). Brandon can stay there until June 1, but has to pay $12,500 rent per month. She also keeps the property on Cattle Drive, and he has to pay her $52,000 rent per month on that until he is gone in June. She keeps pets, cars (Ford Bronco, Ford F-250), Porsche Cayenne), and a flight simulator.

Brandon gets the farm cattle, livestock, stock dogs, and horses. He also gets vehicles including a Ford F-350, a Ford F-250, an ATV, and several CAT snowmobiles. He gets a golf simulator and some Patek Philippe watches. Continue reading

You Will Not Get Your Money Back From Zelle

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Zelle is a popular money transfer app, in large part because it doesn’t charge fees to move money. But fraud is happening there, and banks aren’t giving the money back to defrauded consumers.

If you send money to the wrong recipient, good luck getting it back. You cannot recall a transaction and the bank will not reverse it for you. You’re left hoping the person who got the money does the right thing and sends it back.

A few months ago I received $100 via Zelle from someone I didn’t know. All that came with the transaction was a name. I tried to track the person down and found a possible suspect on LinkedIn, but she never replied to my message. If she doesn’t contact me and give me an email address or mobile number attached to her bank account, I have no way to give back her money. Continue reading

Kim Kardashian and Kanye West’s Prenuptial Agreement

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There’s nothing like a little celebrity gossip to start the week off right. The terms of the prenuptial agreement between Kim Kardashian and kanye West were recently made public. And some of the numbers may surprise you.

When doing a prenup, it is generally required that both parties disclose their assets, liabilities, and income to one another. (State laws vary a bit, but this is generally the rule.)

The agreement was signed in 2014 when Kim and Kanye had been living together for a year and had one child. They reported their incomes form 2011 and 2012 at $9.1 million and $8.4 million for Kim, and $1.9 million and $4.6 million for Kanye. Continue reading

Working With an Expert Witness

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A competent expert witness is vital to cases involving economic damages and other financial calculations. However, the expert must be much more than just a mathematician, market analyst, economic guru or forensic accountant. The job of the expert is far from over once the facts are analyzed and the calculations are completed.

Traditional accounting and finance skills are not enough when it comes to litigation. A financial expert witness must qualify as an expert in court and must convey the findings to non-accountants on paper and on the witness stand.

Probably one of the most important yet difficult parts of being a financial expert is relaying the findings without using accounting lingo. Accountants often forget that not everyone speaks their language. They are not used to explaining their findings to people outside the finance environment. Creating a meaningful understanding for readers and listeners can be an art form unto itself, and the best financial expert witnesses do it easily.

Although attorneys are educated in many facets of the law, they are not necessarily numbers experts. That is why it is so important to find the right expert who can help legal counsel fully understand the financial data and its implications. A competent forensic accountant or other financial expert is mindful of the needs of non-accountants when reporting on the findings of a financial examination. Continue reading