One of the most complex areas of the law is family law. It encompasses a range of diverse concerns and issues – financial as well as personal. These include elements of finance, taxes, long term planning, long term contractual relationships, human issues (sometimes bordering on the irrational), custody battles, estate tax, and virtually anything else that could happen when two individuals emotionally address the breaking up of a financially complex, long term partnership.
The roles that the CPA fills are truly multi-faceted. We cover the financial investigation of a business, determination of benefits/perquisites, funds flow tracing, development of a lifestyle analysis, uncovering unreported income, uncovering hidden assets, the valuation of a business, tax and financial planning. We bring to the fore the combination of the specialized knowledge necessary to function in this area, the intuitive sense of how to tackle financial investigations, the ability to deal with the people and emotional issues and to be able to be a credible expert witness.
Discovery – often, before we even get serious about doing what we do, it is requested of us to assist in determining what needs to be provided in discovery and then following up as the issues develop and expand.
Financial Investigations – also called forensic accounting, often the guts of what we do; the detailed review and analysis of the books and records of one or more closely held businesses; for the purpose of determining the real income generated from the business as well as compensation and benefits (perquisites). Often we are asked to do a financial tracing investigation where there’s no business involved, but rather a pool of funds/investments.
Business Valuations – the financial exposure of the business owner – or the potential financial benefit for the non-business spouse – is often the biggest dollar item in a case. This is an area that can make or break a divorce case, and where we have often produced stellar results in trial as well as in the negotiation process.
Lifestyle – even when a business is involved, a standard of living analysis can be more important than the business investigation and valuation itself. How did the couple or family live; how was money spent and saved. We provide a solid understanding of the marital lifestyle – a critical element in helping to support a position as to the appropriate amount of alimony/support.
Tax Matters – divorce has a unique set of tax laws. We address the tax implications of equitable distribution, retirement assets, alimony, child support and a multitude of other very special issues.
Negotiations and Settlement – the ability of counsel to move forward with a strong team effort that includes a divorce savvy CPA, can be invaluable in the negotiation and settlement process. This often includes our being able to be creative, developing the necessary cash flow out of what is often an illiquid pool of assets, so as to enable the parties to accomplish their combined desired goals.
Expert Witness Testimony/Trial while most cases settle, there are just some cases that are going to trial. When it comes to the final denouement, there’s nothing that can supplant the experienced expert witness, one who has testified on numerous occasions. Our judicial decision track record speaks for itself.
Comprehension and Creativity – these are words not often used in conjunction with the contribution made by CPAs in divorce litigation. However, our ability to comprehend the situation, grasp the pieces and the nuances, and to apply knowledge, experience and insight in a creative fashion is one of those abilities that make all the difference in a case.
A Fresh Start – a reality of working on behalf of the non-business or non-financial spouse, is the need, once the divorce is resolved, to help that person to manage financially. Whether it be helping someone grasp a budget or deal with tax issues, or addressing the complexity of handling the investment of a pool of funds, we are there to help – directly, or by recommending independent third parties with whom we have familiarity and confidence.
WITH THE PRECEDING IN MIND, WHY DON’T YOU JOIN US NOW TO WALK DOWN THE PATH OF THE ACCOUNTANT’S ROLE IN A COMPLEX DIVORCE ACTION?
- The initial engagement process – including telephone calls with attorneys and clients
- Initial document or discovery request – asking for tax returns, financial statements and perhaps a volume of other financial documents
- Preliminary review of the tax returns, financial statements and the like, to get an overview understanding
- Interview of one or both of the spouses
- Discovery request of the business owner as to access to various records
- Correspondence with spouse’s employer to get details of benefits
- Review of the documents from the spouse’s employer to understand the benefits and what the spouse receives. If stock options, addressing the value of same
- Site visit and walk-through, as well as interview of business owner
- Financial investigation, a review of books and records, and development of adjustments
- Ongoing, and sometimes frequent, correspondence and discussions re discovery (access to records) needs.
- Economic research relating to issues involving the Company, and valuation
- Possible expansion of forensic and financial investigation to determine the extent of personal expenses paid through the business
- Expanded forensic investigation to address unreported income issues
- Detailed review of a few years of personal expenses – including through checking accounts and charge accounts
- Development and fine-tuning of standard of living/lifestyle analysis
- Development of approaches to valuation of the business
- Development of a report
- Conferences (this might have also been happening during various stages of the above)
- Assistance in the negotiation and settlement process
- Preparation for and testimony at depositions
- Preparation for and testimony at trial
- Post-divorce assistance regarding financial and tax issues
In our years of intensive involvement in litigation matters, and in particular with many divorce cases to our credit, we can point to a number of major decisions/cases in New Jersey in which we have been involved. Over the years, these have included:
- – A plastics manufacturer, where at the trial level the judge kept the parties together financially by giving the wife a voice in the business of the husband; and the appellate court overrode that, indicating that it was inappropriate to keep the non-business spouse with a hand in the business after the divorce.
Brown – Involving a wholesale florist supplier; setting the basis in New Jersey for fair value versus fair market value as the standard of value for business valuation in divorce.
Crews – While this case involved a business, it’s claim to fame was that the appellate court remanded it back to address the need to establish, for alimony and support purposes, what the lifestyle was during the marriage. In recent years, this has set a standard in New Jersey for the need to address marital lifestyle for purposes of addressing the adequacy of any findings on the need for, and the extent of, alimony and support.
Orgler – Involving a few Midas Muffler outlets; with the decision in this case indicating the relevance of taking taxes on the business value appreciation into account as one of the factors in deciding the distribution percentage to the non-business spouse.
Wadlow – Another situation without a business involved, but here the matter at hand involved only the value of the marital home, and the court’s decision that unless the home was being sold, value is not reduced for an assumed commission on sale.
The BARSON GROUP would welcome your inquiries, and we look forward to working with you. In addition, many times we have worked with clients who are already committed to an accounting firm – but get us involved (often the other accounting firm brings us in) for special needs where we can work well in tandem with their existing accounting firm.