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 Vermont, during divorce proceedings, financial transparency is crucial, particularly in high-asset or high-net-worth cases. Vermont law requires equitable distribution of marital property, which means that assets and debts acquired during the marriage must be divided fairly, though not necessarily equally, between the spouses. If there is suspicion of financial manipulation or fraud, such as hiding or undervaluing assets, it can significantly impact the division of property, as well as spousal and child support determinations. To uncover any financial discrepancies, one or both spouses may employ a forensic accountant. Forensic accountants specialize in identifying irregularities in financial records, including personal and business finances. Their expertise in tracing assets and analyzing complex financial data helps ensure that all marital property is accounted for accurately in the divorce settlement. The use of forensic accounting in divorce litigation helps to protect the financial interests of both parties and assists the court in making informed decisions regarding asset division and support obligations.