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 New York, during divorce proceedings, particularly in cases involving high-net-worth individuals with substantial assets, financial manipulation or fraud can significantly impact the division of marital property, as well as spousal and child support determinations. To ensure an equitable distribution of assets and accurate calculation of support payments, one or both spouses may engage a forensic accountant. These professionals specialize in uncovering hidden assets and identifying financial discrepancies in various types of financial records, including tax returns, bank and investment accounts, and tangible assets like real estate and luxury items. The process, known as financial tracing or forensic accounting, is crucial for providing the court with a precise financial picture, which is essential for a fair resolution in the divorce settlement. New York State law requires full financial disclosure in divorce cases, and the use of forensic accountants helps to enforce this requirement by revealing any attempts to conceal or manipulate financial information.