Divorce is challenging no matter the circumstances, but the right professionals can lighten the burden and improve the outcome. Should you need to assemble a marriage dissolution team, an attorney who practices solely in family law is an obvious first hire. However, a divorce financial expert can also be a valuable addition to your team. A Certified Public Accountant (CPA) experienced in marital dissolution matters can provide critical financial guidance throughout your divorce. Leveraging deep expertise in accounting, taxation, and finance, a divorce financial advisor can help aggregate and distill financial data, so divorcing parties can make informed settlement decisions.
To best serve your needs, your divorce financial expert should have tested and proven financial models and analytic processes. The expert should also have consistently practiced as a full-time CPA, and have demonstratable experience in the following divorce financial procedures:
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- Business valuations
- Marital balance sheet preparations
- Assessing financial implications of a proposed property settlement
- Calculating and critiquing nonmarital tracings
- Determining after-tax cash flow under various scenarios of property division, child support and spousal support
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Having a qualified divorce financial expert on your team will provide the expertise to secure a settlement that is fair and protects your long-term financial interests.
Navigating the Added Complexity of Business Ownership
Divorce is even more complicated when one or both spouses are self-employed or have an ownership interest in a closely held business. Frequently, the business is the most valuable asset of the marital estate, but its actual value is unclear. Moreover, determining the income of a self-employed individual is difficult, as business owners may comingle business and personal expenses or under/over report revenue and expenses. To navigate these issues, a divorce financial expert’s knowledge and input may be essential.
Informed Property Division Assessment
A comprehensive marital balance sheet that lists all the of the parties’ assets and liabilities in one place is necessary to make informed property division decisions. Balance sheets can range from a simple listing of assets and liabilities to a complex undertaking with a mix of pre- and post-tax assets. They may also require outside opinions about the value of real estate, business interests, and pensions.
Financial experts help ensure that marital balance sheets account for all assets and liabilities, are error-free, and provide the appropriate tax treatment of the assets and liabilities. The divorce financial advisor can also assist with data collection, settlement negotiations, and trial testimony. Financial experts who are also CPAs can estimate investment income and assess the pros and cons of keeping certain assets over others, to assess the financial implications of a proposed property settlement now and into the future.
Nonmarital Tracing
In the state of Minnesota, a divorce proceeding may involve both marital and nonmarital property. Typically, a nonmarital claim relates to property or assets that were owned prior to the start of the marriage, or that were gifted to or inherited by one party during the marriage. Nonmarital tracings usually involve the tracing of claims related to businesses, real estate, investments, retirement accounts or employee equity awards.
A client asserting a nonmarital claim may benefit from the financial expert’s experience with nonmarital property case law and nonmarital tracing. Experts will work directly with the client to review and analyze supporting documents and can request additional information when necessary. Divorce financial experts also prepare schedules summarizing the nonmarital claims for use during settlement negotiations, and can write reports detailing nonmarital claims, should the case make it to trial.
Accurate Cash Flow Analysis
A CPA with marital dissolution experience also helps determine income in the event that one party is seeking child support and/or spousal maintenance. Through cash-flow analysis and related activities, the CPA can:
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- Determine the historical income and cash flow of the parties
- Estimate post-divorce income, taxes, and living expenses
- Calculate each party’s after-tax cash flow based on various child support and spousal maintenance scenarios
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Cover All Financial Bases
Marital dissolution often involves complex financial issues that can affect a client’s financial future long after the divorce decree. Yet, most family law attorneys do not have a background in finance or accounting—or if they do have the requisite knowledge and expertise, they are not allowed to testify on behalf of their clients in court. Thus, a divorce financial expert can be a vital addition to the divorce team. A divorce financial expert uses financial, accounting, and tax expertise to aggregate and distill financial information, allowing divorcing parties to make informed settlement decisions. To talk to a CPA with extensive marital dissolution experience, contact Corey O’Connell at coconnell@boulaygroup.com or 952.841.3025.