What does a family law forensic accountant do?

Stowe Family Law|August 11th 2014

Stowe Family Law is one of the only firms in the country with an in-house forensic accountancy team. In this special feature, Nick White explains the nature of his role.

Divorce proceedings can be an emotional experience for even the most well-adjusted of couples. In this day and age though, the settlement of those proceedings will be focused firmly on the money: how the family’s accumulated wealth should be shared and how the ongoing income should be divided, particularly when children are involved. There are frequently financial complexities to resolve.

Family law solicitors will frequently instruct forensic accountants to assist with the resolution of those financial issues, for example the value of a business, the income it produces, the tax consequences of a particular plan and so on. Usually those instructions are made jointly by both parties’ solicitors and the accountant is retained as a ’Single Joint Expert’ to prepare a report for the Court. This has the downside that neither party in a particular divorce is able to sit down with the expert (and their client) to discuss the financial issues in detail and so they may not fully understand what the report says.

As in-house forensic accountants Suzanne Grant and I are what could be termed ‘shadow experts’ or experts working for, or advising, one side only. The firm is not hamstrung by the restriction of having to use an external expert to report on specific financial issues. Our clients (and solicitors) are able to access our knowledge and expertise at any time and openly discuss any of the financial aspects of their case, however large or small in value or consequence. The firm is able to consider if the appointment of an external expert is merited or desirable in the circumstances of the case.

So, what do we actually do?

One of our key day-to-day roles is to be accessible to our clients, to keep them informed of and involved in the complex financial aspects of their case. We explain the financial matters to them in an easy-to-understand way, as far as it is possible to do so. This is particularly important to those clients who have not managed the family finances, or are not fully aware of them, but where the value of the assets may run into many millions.

Our role is extremely varied and is very much dictated by the needs of each individual client and the financial circumstances of their case. One day we may be investigating for hidden assets or diverted funds, the next preparing or evaluating a business valuation and projection. Then we may be considering the tax aspects of transfers of assets or the amount of income a spouse can take, or should be taking, from their business. We may look at the value of share options in a foreign company or the value of interests in a trust. Other examples of our work include:

  • Assistance with the provision of our own client’s financial disclosure, including consideration of business valuation where relevant.
  • Interrogation of the completeness, fullness and accuracy of the other party’s financial disclosure and raising questions where necessary.
  • Meetings with a client to discuss financial disclosure and investigations into (potentially) hidden assets if required.
  • An expression of views on business valuations and whether an external expert report may be required. If so, then we may evaluate the report of that expert and raise any questions.
  • Investigations into the accuracy of declared incomes: what income can be (and has been) produced by a business and whether that declared income consistent with lifestyle.
  • Considering the tax aspects of a case, e.g. income tax and capital gains tax (for example in relation to a portfolio of properties), or the tax implications of various settlement scenarios.
  • Production of our own in house reports on financial issues pertinent to the case to assist presentation of a client’s case at Court.
  • How to fund settlements in situations where assets are ‘illiquid’ (ie not easily converted into cash).

We also attend meetings with clients or Counsel and where required for settlement negotiations. The list goes on.

Our role is very much tailored to each individual client’s needs and those needs are different in each case. We work across all six of our six offices and we become involved in whatever way is necessary to help ensure that the client achieves the best settlement possible.

 

Author: Nick White

Nick White heads Stowe Family Law’s in-house forensic accountancy department. He is a chartered accountant of 30 years’ standing.

Comments(2)

  1. Blair Illiano says:

    Thanks Nick for this informative article.

  2. Sabi Ahmed says:

    You have described the deeds of family law forensic accountants in very understandable manner. lots of deeply aspects have come across to me through this post about which I didn’t know before. thanks for raising my knowledge.

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