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Financial Statements, Income Tax Returns, and Other Divorce Documents

Sheri Green Schultz

Financial Statements, Income Tax Returns, and Other Divorce Documents
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As we all know, the divorce process can be convoluted and difficult to navigate for everyone involved. Financial issues often confound an already complex situation.    

The discovery process is designed to provide a clear picture of each spouse’s financial situation for purposes of determining alimony, child support, and the division of assets and liabilities. However, the simple process of exchanging financial records can be a recipe for disaster if either party fails to disclose income or assets.

In some situations, nondisclosure of income or assets may be explained by a lack of knowledge—simply not knowing what to provide. For example, a spouse may not realize that fringe benefits provided by his or her employer are included as marital income. On the other hand, the deliberate nondisclosure of income or assets can exacerbate anger and cause mistrust.   

Working with a financial professional skilled in the discovery process is often necessary in order to take a deep dive into the opposing party’s financial records. A forensic accountant can help clients accurately complete the financial affidavit, as well as analyze the other spouse’s own affidavit and supporting documents.

Documents requested by the forensic accountant may include:

  1. The past three years federal and state income tax returns; intangible personal property tax returns; corporate, partnership, or trust tax returns; as well as sales tax returns for any entity the spouse has an interest in.  
  2. All loan applications and financial statements provided to third parties.
  3. All periodic statements for the last three months for all checking accounts, and from the last twelve months for all other accounts (savings accounts, brokerage accounts, money market funds, certificates of deposit, etc.), including cancelled checks and wire transfers.
  4. All credit card and charge account statements for the last twelve months.

To the extent that the case necessitates the valuation of a business, the following documents may also be requested:

  1. Electronic copy of QuickBooks (or other accounting software) file.  
  2. Copies of any buy-sell agreements and/or written offers to purchase or sell company stock.
  3. Details of transactions in the company’s stock during the last five years.

In the divorce arena, the forensic accountant combines his or her accounting knowledge with investigative skills to provide a clear picture of the parties’ financial situation. The accountants’ work product may include a lifestyle analysis, evaluating the dissipation of marital funds, assessing need for and ability to pay alimony, making child support calculations, creating equitable distribution schedules, and performing a business valuation where appropriate. Not every divorce involves complex financial issues, and the extent of a forensic accountant’s involvement can vary by case. However, obtaining an accurate financial picture at the beginning stages of the process can clear the way for a smoother divorce settlement outcome.