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 or secreted 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.

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 California, during divorce proceedings, the division of marital or community property, as well as determinations of spousal and child support, are significantly influenced by the accurate accounting of assets and incomes. California is a community property state, meaning that all property and debts acquired during the marriage are considered jointly owned and are typically divided equally in a divorce. If there is suspicion of financial manipulation or hidden assets, one or both spouses may engage a forensic accountant to conduct a thorough investigation, often referred to as tracing or asset tracing. Forensic accountants specialize in uncovering financial discrepancies and locating assets that may not be disclosed in personal and business financial documents, including tax returns, bank and investment accounts, and tangible assets like real estate and luxury items. Their expertise helps ensure that all assets are accounted for so that the court can make a fair division of property and accurately set support payments. The findings of a forensic accountant can be pivotal in high-asset or high-net-worth divorce cases, where the stakes are particularly high.