A significant reason why divorce can take a long time is because of disputes over financial issues – both division of assets and support. Bringing in financial experts as part of your legal team is sometimes necessary in order to address these financial issues. Financial experts can efficiently conduct the complicated analysis that may be required in your case, especially if you have business assets or other assets requiring valuation by an expert, suspect your spouse is withholding information, or just want to verify that you have a complete picture of your finances. While financial experts can be beneficial in a wide range of cases, some of the most common scenarios include the following:
One or both divorcing spouses own a business
When a party has a business, it will need to be valued for purposes of dividing assets in divorce. A business valuation expert can review and analyze the business’s records, including tax returns, general ledgers, bank statements, accounts payable and accounts receivables, operating agreements, shareholder/partnership agreements, and other documents. Using this information, as well as other information gathered during the discovery process, the business valuation expert can determine how much the business is worth. A business valuation expert can also be helpful in determining what income should be attributed to the business owner for purposes of determining alimony and child support.
A spouse may be hiding income and/or assets or dissipating assets
If a spouse suspects that the other one is hiding income or assets or dissipating (i.e., wasting) assets during the marriage, it often makes sense to bring in an expert to conduct a tracing analysis. As part of the tracing analysis, the expert reviews the spouse’s income and expenses, comparing the income to bank balances and credit card statements to determine whether income may have been funneled to other individuals or accounts. If there is suspicious activity, additional steps can be taken to identify the hidden income or assets. The company’s income and expenditures can also be traced to ensure that no income is hidden, especially if a spouse has access to cash in the business.
There are assets that are difficult to value for divorce
High-wealth individuals often have more complex compensation structures, including stock options, restricted stock, phantom income, carried interest, and deferred compensation. One or both spouses may have financial interests in private equity, hedge funds, and venture capital entities. A financial expert can determine how to value these interests and divide them in divorce as well as how to structure alimony taking into account these potential income sources.
There is a dispute over the earning capacity of one or both spouses
Typically, earning capacity disputes arise when a spouse is unemployed or earns less income than he or she is capable of earning. An expert can look at the party’s historical earnings, employment history, vocational skills, employability, age, and health to prove (or disprove) the other party’s earning capacity.
Other benefits of using a financial expert
A financial expert in divorce can add significant value to a divorce case by helping the lawyer and the client to understand the overall financial picture, evaluate and prepare settlement offers, assist in developing a strategy for the case, rebut evidence, including the other side’s expert’s opinion, and to otherwise analyze disputes over income and property. Importantly, they are often able to do their work at a lower cost.
At Broder Orland Murray & DeMattie LLC, we incorporate financial experts into our team where we think it is appropriate and where we think it will add value to the case. We have extensive experience working with experts to help achieve results for our clients.
If you are considering divorce, contact us for a consultation today.