by Ky M. Koch
The Forensic Financial Expert is a vital and important member of your Team of professionals in a divorce case. Certainly, there must be sufficient financial issues to warrant the engagement of a Forensic Expert. However, assuming that to be the case, this person is integral to a settlement or, if necessary, a Trial in your divorce case.
The Role of a Financial Forensic Expert: Business valuations, tracing of pre-marital and non-marital monies, calculation of tax impact, analyzing income and lifestyle expenses, and providing clarity in the distribution of assets and financial picture post divorce, all are matters within the expertise of the Forensic Financial Expert.
Business Valuations: If either or both parties own an interest in a business, it is almost impossible to progress through a divorce without a valuation of the business or an analysis of the financial matters relating to that business. The rules for valuation in divorce are much different than what most people perceive. The calculation of professional goodwill, enterprise goodwill, and minority and marketability discounts are all complexities which require the assistance of a skilled forensic analyst.
Selection of the Expert: Your lawyer should select this expert. Your attorney knows which experts have the qualifications to assist with the issues in your case. Also, having a forensic expert that works well with the professional team is critical. Certainly, you should interview and obtain a comfort level with the expert selected by your lawyer. Ultimately, it is critical that the expert and your lawyer are on the same page and work well together.
Tax Accountant as Forensic Expert: Many times, I have been asked to utilize a client’s long-time tax accountant as the forensic expert. This is rarely a good idea. First, that accountant may likely have a conflict of interest in having filed joint tax returns and thus represented both husband and wife in the past. Also, that person is subject to an attack of impartiality because of their bias toward their long-term client and likelihood of continued employment by that client well after the divorce. Most importantly, the tax accountant rarely possesses the knowledge of divorce law and familiarity with the courthouse.
The Cost of a Forensic Expert: There is no doubt that the cost of an Forensic Expert can be significant. Sometimes, that cost can outpace the legal fees. However, with proper controls and good communication, a divorcing spouse can and should monitor and consistently be aware of the focus of work and the projects undertaken by the Expert. The analysis should be designed to create value and save money for the divorcing spouse.
Joint Experts: It is very often desirable for divorcing spouses to employ only one joint Forensic Analyst. Doing so avoids duplication of fees where each spouse has hired their own Forensic Expert. However, certain facts, circumstances, and issues do not lend themselves to a joint expert. You should discuss this very thoroughly with your attorney and make a reasoned decision on this topic. Obviously, it requires a cooperation and consent from both parties.
Conclusion: This discussion is an important one in your divorce case. You should have a thorough and open discussion with your lawyer regarding the involvement of a Forensic Expert in your divorce.