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forensic accounting

A forensic accountant is generally an accountant with expertise in detecting financial fraud or manipulation in personal and business tax returns, bank accounts, investment accounts, retirement accounts, broker accounts, offshore accounts, cash, cryptocurrency, jewels, art, cars, yachts, airplanes, real estate, life insurance policies, and related financial documents. This financial investigation work is often referred to as tracing, financial tracing, asset tracing, or forensic accounting, and generally involves “following the money” by tracing a piece of financial information or data back to its source.

In divorce litigation—and especially in high-asset or high-net-worth divorces in which there is significant marital or community property—any financial manipulation or fraud of personal or business finances may have a significant effect on the marital or community property that is available for division, and on spousal support and child support payment amounts. One or both spouses in a divorce may hire a forensic accountant to discover any hidden assets or manipulated financial documents that may prevent the court from having an accurate accounting of the marital or community property assets and the spouses’ incomes.

In Texas, forensic accounting is a critical tool in divorce litigation, particularly in cases involving high-net-worth individuals or substantial marital assets. Texas is a community property state, meaning that all property acquired during the marriage is presumed to be owned jointly by both spouses and must be divided equitably upon divorce. Forensic accountants are hired to ensure that all assets are properly disclosed and valued. They specialize in uncovering financial fraud, hidden assets, and manipulation of financial documents. Their expertise in tracing and financial investigation helps to reveal the true financial picture, which is essential for the fair division of assets and determination of spousal and child support. The findings of a forensic accountant can significantly influence the outcome of a divorce settlement by providing evidence of the actual income and assets of the spouses. Attorneys often work closely with forensic accountants to present these findings in court, ensuring that the division of property and support calculations are based on accurate financial information.

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