By: Sarah T. McCain
While generally issues of custody and complicated visitation schedules often seem to take precedence in divorces, the division of property and debt is an also pressing matter that should not be overlooked. Complacency can easily set in place as individuals see the court’s position of dividing marital property equitably between the spouses as being a pretty clear cut sign that property will be equally divided. However, this is not always the case as there are arguments available, such as “contribution,” which can be used to obtain a difference in the percentages assigned to each party.
Prior to getting to the overall division of assets, the value of each and every asset must be determined. This starts with the initial disclosure in your sworn financial statement. In this document, you have the first opportunity to list a value for any assets owned during the marriage. At this stage, it is okay to list unknown on an asset such as a residence, and you can supplement a value in later when one becomes known. If you do have a figure though, it should be listed. Once these documents are exchanged between the parties, compare each document and look at where values differ. In some cases, it is possible to simply split the difference if the proposed values are not that far apart. In some instances, however, it will be necessary to obtain an appraisal through a licensed appraiser and specifically someone who understands that it may be necessary for them to testify in court related to their report. Please review other Plog & Stein blog posts which delve deeper into the topic of hiring an appraiser for your home.
Another expert who may come into play tied into assets might be a forensic accountant. A forensic accountant is a CPA. Hiring this individual may be helpful in high conflict divorces where significant assets are at stake. A forensic accountant can be hired to review the initial disclosures which are exchanged and to assist in putting together the overall picture of the marital assets. However, a qualified attorney experienced in domestic cases can also put together this type of analysis so it is suggested that you not make this leap unless critical. A forensic accountant would generally only come into the picture when there are concerns as to how best to move forward if you believe that someone is hiding assets, when there may be potential dissipation of an asset that will need to be tracked, or to provide an analysis of potential income sources from a business where a party may not be taking a cash distribution. The forensic accountant will take all of the documentation obtained via initial disclosures or any discovery that has been done and will provide an audit on what they find. It can be limited in scope or as broad as necessary. Hiring this type of individual could be extremely beneficial in a situation such as many marriages where one party is tasked with child rearing and the other party manages the money. This can leave one party feeling out of the loop when it comes to their finances. Hiring a forensic accountant could be worth the funds spent on such an expert to provide the ease of mind necessary to move forward with litigation or settlement. Of course a cost-benefit analysis should be done prior to enlisting such an expert, meaning the cost should be weighed against the potential perceived assets’ values.
If you are going to litigation, there does not need to be agreement on the value of these assets or debts. The court will accept an asset and debt worksheet, listing proposed values, from either of the parties and will ultimately make findings as to value(s). By this time, it is vital that you have proposed value for each of the assets that need to be divided and evidence supporting such. You should also have updated your financial disclosures before. Any of the values of the assets should be updated from both disclosures and discovery. If you used an expert, such as those listed above, you need to ensure that these experts are available, compensated, and properly listed as a witness for trial. Start early on in the divorce process if you believe a forensic accountant is necessary. It will take time to do the evaluation and reports.
As set forth above, there are many issues and tasks that come in a divorce case and being on top of each of those, with a strategy in mind, including marital property, can lead to better outcomes in the end.