How Does a Forensic Accountant Discover Hidden Assets During a Divorce

A divorce attorney may work with a forensic accountant to understand how a current or former spouse is failing to disclose assets and debts. The forensic accountant may gather bank records, phone records, tax records, and documents on file with the county clerk’s office or the state. When the current or former spouses are involved in a divorce, child support, or child custody case, a person’s local divorce attorney may subpoena documents. 

The Birmingham divorce attorney typically has more access to documents if the parties are still married. Here are some examples of ways that the forensic accountant can uncover assets:

• The forensic accountant may ask or look for a party’s login and password to view cryptocurrency and NFT token purchases in a digital wallet. The accountant may also ask for bank records regarding the storage of these assets. 
• The forensic accountant may look for itemized deductions on Schedule A of a person’s tax return to determine the person’s investment interest, property taxes, gifts to charity, and home mortgage interest. This helps them see the value of the person’s real property interests and how much money they are able to give away. When a person has valuable property or can afford to give away large sums, they may have hidden assets or income streams. 
• The forensic accountant may ask for information related to shell companies or limited liability companies that the person established to hide assets. 
• The forensic accountant may request records regarding cash advances or bonuses from a person’s employer. They may also request records like emails about how an employer is delaying a bonus or raise until after the divorce becomes final. 
• The forensic accountant may look for payments of fake debts to creditors. 
• The forensic accountant may look for cash purchases of expenses such as luxury items and trips for a person’s love interest outside the marriage.

A spouse can use a business to hide purchases, assets, and debts that they have kept secret from their partner. The forensic accountant may look at business records to ensure loans, purchases of electronics equipment, and real property rentals are related to the nature of the business. 

Methods of analysis include:

• Reviewing bank deposits, canceled checks, and currency transactions for a business or individual. The forensic accountant will also simultaneously review receipts for currency that was not deposited in a bank and cash sources that are not income from a business, including gifts, loans, funds provided by insurers to cover losses, and inheritances. 
• Analyzing a person’s salary, inheritances, loans, gifts, and cash on hand during a set period, to determine if a person is living beyond their means and where their money is going. 
• Determining the party’s net worth at a given point, using bank records, student loan payments, brokerage statements, real estate records, and loan and credit card applications. 

When the forensic accountant finds that a person has not been honest about their financial matters, the divorce attorney and the client should determine what to do about the lies and omissions. Often, a client becomes so depressed and upset that their former partner is being deceitful that they choose not to discuss the concern. This is not the right tactic. 

The client should disclose the lies or omissions to the court. This makes it clear that their former partner is not being honest. The court will then penalize the former partner through sanctions and fines. This will make it harder for the former partner to get what they want from the lawsuit. This usually benefits the client to some extent. 

It is important that the client not badmouth the former partner to the couple’s children. The client could face fines and penalties if they do. The client should work with a therapist to address their anger and frustration as they attempt to get documents and get access to the hidden assets. 

It can take weeks or months to trace the trail of hidden assets. The goal is for the client to get half of any property that their former partner earned during the marriage. The client is not entitled to separate property. This is property their former partner received as an inheritance at any point, and money or property the former partner acquired before the marriage.

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