When a marriage ends in Garden City, or anywhere across New York, the process of dividing assets is rarely straightforward. However, for high-net-worth individuals, the financial stakes are significantly higher. In these cases, a standard review of bank statements is often insufficient to ensure an equitable outcome.
This is why we frequently recommend engaging a forensic accountant. These professionals serve as financial detectives, using their skills to look beneath the surface of tax returns and spreadsheets to find the truth about a couple’s marital estate.
What Is a Forensic Accountant?
A forensic accountant is not a traditional CPA who simply prepares taxes. They are trained in investigative techniques suitable for use in a courtroom. Their primary goal in a divorce is to provide an objective, evidence-based picture of the couple’s total wealth, income, and spending habits.
Uncovering Hidden Assets and Income
In high-asset cases, it is unfortunately common for one spouse to attempt to conceal wealth to influence the final settlement. Wealthy individuals often have access to sophisticated methods for obscuring money that standard discovery might miss.
A forensic accountant will look for red flags such as:
- Offshore Accounts: Funds transferred to international banks that are difficult to trace without specialized knowledge.
- Deferred Compensation: Intentional delays in receiving bonuses or stock options until after the divorce is finalized.
- “Ghost” Employees: Business owners might put non-existent employees on the payroll to lower the company’s reported profit.
- Personal Expenses as Business Costs: Using a company account to pay for vacations, luxury cars, or home renovations.
By performing a lifestyle analysis, these experts compare a spouse’s reported income against their actual spending. If a spouse claims to earn $200,000 a year but lives a $1 million-a-year lifestyle, a forensic accountant will find where the extra money is coming from.
Valuing Complex Business Interests
For many high-net-worth couples in New York, a significant portion of their wealth is tied up in a closely held business or a professional practice. Determining the fair market value of these entities is one of the most contentious parts of a divorce.
Forensic accountants use established methodologies to assess the value of tangible assets, such as equipment and real estate, as well as intangible assets like “goodwill”. This ensures that the non-owning spouse receives their fair share of the business’s actual worth, rather than a manipulated figure designed to minimize the payout.
Tracing Separate vs. Marital Property
New York follows the rule of equitable distribution, meaning marital property is divided fairly, though not necessarily 50/50. Separate property, such as an inheritance or assets owned before the marriage, generally remains with the original owner.
However, over the years of marriage, these funds often become “commingled”. If you used an inheritance to renovate a marital home, or if marital funds were used to pay the mortgage on a pre-marital property, the lines become blurred. A forensic accountant performs “asset tracing” to trace the money and determine which portion of an asset remains separate and which has become marital property.
The Impact on Support Payments
Both child support and spousal maintenance (alimony) are calculated based on the parties’ actual income and the standard of living maintained during the marriage. If a spouse successfully hides income, the other party may receive thousands of dollars less each month than they are legally entitled to.
Forensic accountants ensure that the court uses accurate numbers, not just the figures listed on a W-2 or a tax return.
Why You Need Professional Guidance
High-net-worth divorces are not just legal battles; they are high-stakes financial investigations. Attempting to handle these complexities without professional help can lead to permanent financial loss.
At Aiello & DiFalco, we regularly collaborate with trusted forensic accountants to protect our clients’ interests. Our attorneys will:
- Identify when a forensic audit is necessary to protect your future.
- Work with financial experts to build a defensible case for the court.
- Review and challenge the findings of your spouse’s experts.
- Ensure that every asset is accounted for before you sign a final agreement.
Would you like us to review your financial situation to see if a forensic accountant is right for your case?
