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 Colorado, during divorce proceedings, particularly in cases involving high assets or significant property, financial manipulation or fraud can greatly impact the division of marital property, as well as spousal and child support determinations. Colorado is an equitable distribution state, meaning that marital property is divided equitably, but not necessarily equally, during a divorce. If one party is suspected of hiding or misrepresenting assets, a forensic accountant may be employed to conduct a thorough investigation. This process, known as tracing or forensic accounting, involves meticulously tracking financial transactions to uncover any concealed or misrepresented assets. The forensic accountant's findings can be crucial in ensuring an equitable division of assets and proper calculation of support payments. The court relies on accurate financial disclosures from both parties, and any discovered fraud or manipulation can lead to legal consequences, including a potential reevaluation of the asset division and support obligations. Attorneys often recommend the use of forensic accountants in complex financial cases to safeguard their clients' interests and to present a clear financial picture to the court.