Often in divorce, determining the whereabouts and value of marital assets become highly contentious issues. And when this situation surfaces, the hiring of a forensics accountant is a critical next step.
To delve into this subject, I sat down for a chat with Philip Shechter. A litigation support partner at Cherry Bekaert, Shechter has more than 30 years of experience supporting clients in commercial litigation and marital dispute resolution cases. He is also a board member of Matters of Divorce.
DM: Once the need for forensics accounting work is determined, what is typically the next issue to address?
Shechter: Usually, it’s agreeing on the need for one or two CPAs. Traditionally, in a divorce, each side hires a CPA to determine the separation of finances. As a result, dueling accountants are likely to disagree and present differing sets of facts, numbers and assumptions, increasing the likelihood of a trial.
DM: Is there a practical way for divorcing couples to get around this potential roadblock?
Shechter: To combat the issue, more family law attorneys, as well as judges, recommend hiring a single, neutral CPA. A neutral CPA can collect documents and make inquiries of both parties without the filing of discovery motions. There is generally no need to depose the neutral forensic accountant. Professional time usually spent at hearings on discovery issues may be eliminated. The neutral CPA can determine income and expenses, prepare a schedule of assets and liabilities, and value businesses and other assets where necessary.
DM: How does a neutral CPA work with the attorneys for each party to the divorce?
Shechter: First and foremost, each lawyer must have their client’s authority to request forensic accounting services from the neutral CPA, in whole or in part. In addition, the neutral CPA should be certain that both parties’ attorneys are fully satisfied with the terms of the client-attorney-CPA channels of communications for the engagement. The neutral CPA generally will provide scenarios with ranges of numbers to allow some flexibility to the parties to negotiate a settlement. Providing financial alternatives, where necessary, allows the attorneys to represent their client’s perspective and to do their job.
DM: What are the advantages of employing a neutral CPA?
Shechter: Hiring a neutral CPA may help to reduce the expenses of the divorce. The biggest savings may be realized by avoiding the costs of having a trial. Oftentimes, cases involving an impartial accountant can be successfully settled at mediation. At mediation, the neutral CPA assists the mediator by presenting different financial options during the negotiations.
DM: Sounds like an ideal solution, but there must be cases where a neutral CPA is not the best course of action.
Shechter: For sure there are. In order for the arrangement to work there must be some trust between the parties. Marriages with a history of domestic violence or that are destined to become a War of the Roses scenario, for instance, typically are not good prospects. Foremost, at a minimum, the parties must agree up front to provide the neutral accountant all requested documents.
Carlos Blanco founded Matters of Divorce www.mattersofdivorce.com to provide answers, referrals and support to people considering divorce or who recently have been divorced. He may be contacted by calling 305-908-1171 or sending email to firstname.lastname@example.org.