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Performing Forensic Monetary Evaluation In Divorce Proceedings: Half 2 – Flagstaff Enterprise Information

So what are some additional ways to dig deeper if you suspect there may be additional undisclosed assets or liabilities?

Part 1 of this article provided various due diligence tips on asset and debt disclosure, income and expenditure that may be relevant in determining spouse or child support. So what are some additional ways to dig deeper if you suspect there may be additional undisclosed assets or liabilities? Also, what are some tips for discovering undisclosed income?

When reviewing bank statement activity, it is important to record all property tax payments related to undisclosed real estate. The parcel number is often noted next to the name of the district treasurer in the payee box. If a credit card was used to pay tax, the county name is also shown. From there, more information about ownership of the package can be obtained from the county assessor's website via the Internet. Insurance policies are also a good source of information about assets that have value as they are often listed on the policy.

Home loan applications are also valuable sources of information as applicants provide information about assets, debts, and income. Assets listed on a loan application but not disclosed during the divorce should be investigated. The same applies to income claims from a loan application. Income from a loan application should include supporting evidence that can be traced back to information provided during a divorce. The federal income tax return should be reviewed for assets that generate income, such as: B. Pension plan distributions, dividends, interest, rental income and other business income. If one of the spouses has an interest in a company, a company valuation may be appropriate in order to determine the value of their “interest”. It is often useful to check the Arizona Corporation Commission website for evidence of ownership or control of other companies.

With respect to undisclosed defined benefit plans and employee stock options, it is useful to either research the employer's pension plans online or obtain the information through a subpoena. It should be noted that defined benefit plans are valued differently than a typical IRA or 401 (k). The value included in an annual statement such as Such as a plan statement for the Arizona State Retirement System, is not actually a reflection of the value of the retirement benefits to the plan participant. Instead, it reflects what has been contributed so far as well as the value when the plan has been paid off. In addition, not all pensions require employee contributions, so just checking a payroll may not reveal the existence of the plan. That being said, W-2 indicate the existence of retirement or retirement plans. Some employees have both types of plans (a deferred compensation plan plus a defined benefit plan). Again, it is important to fully understand the real benefits of this particular employer.

The review of bank statement activity should also track cash withdrawals that are above what is considered "normal" as they may indicate a cash supply or community waste. Was the content inventoried when a safe was exposed? A subpoena may be appropriate in the event of suspicion of undisclosed bank accounts and safe deposit accounts. All cash advances made by credit card should also be checked. Regarding credit cards and debt in general, it is highly recommended that each spouse receive a credit report. All debts on the credit report should have been disclosed. If there are open accounts with balances, they should be investigated.

With regard to underreporting income, it is important to look for deferred bonuses or other income that may have been deposited after the so-called "service" date. If that income was earned before that point, this should be a subject of discussion and investigation. If there is a tightly run business and there is a suspicion that funds are being diverted or not deposited, it may also be wise to investigate.

If a spouse claims property is "separate" property because he or she had a specific retirement account or other asset (such as real estate or a business) prior to marriage, additional analysis is required as community funds may have been available during the marriage Marriage added.

In conclusion, one would hope that both parties to the divorce would be honest and transparent in sharing property and providing the income and expense information required for spousal claims or child support. Hopefully these tips will be helpful if there is a concern that one party is not being honest during a divorce proceeding. FBN

By Jenny Staskey

Jenny Staskey, CPA, CFE, CDFA, is employed by Aspey, Watkins & Diesel, PLLC as a forensic accountant supporting legal services. She can be reached at Jstaskey@awdlaw.com.

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