If you’ve ever heard the term forensic accountant, you may or may not understand exactly what their job responsibilities are. While they do not solve murders by poring over their clients’ bank records, their job is important in uncovering financial crimes or discovering hidden records and transactions. Forensic accountants use their auditing, accounting, and investigative skills to discover things within financial records that just don’t seem right.
In corporate law, forensic accountants are used to find embezzlement, fraud, and other white-collar crimes. They prepare detailed reports of their findings for use in investigations, litigation, testimony, and as evidence. Forensic accountants in family law, however, play a slightly different role. Family law attorneys typically bring in forensic accountants in high-asset divorce cases when one spouse suspects the other may be hiding assets.
Property Division in Missouri Divorce
To understand the role of a forensic accountant in divorce, we must first understand Missouri’s laws that govern how assets and debts get divvied up in divorce cases. Unlike community property states, Missouri follows the principle of equitable distribution. This means that marital property, which includes assets and debts acquired during the marriage, is divided fairly between spouses, though not necessarily equally. The court considers various factors when determining what constitutes a fair division, including the economic circumstances of each spouse, their contributions to the marriage both financial and non-financial, the conduct of the parties, and the value of each spouse’s separate property.
Missouri law distinguishes between marital property and separate property. Marital property generally includes all property acquired by either spouse during the marriage, regardless of whose name is on the title. Separate property, on the other hand, includes property owned before the marriage, gifts received by one spouse during the marriage, inheritances, and property acquired after legal separation. However, separate property can become marital property if it becomes commingled with marital assets or if it appreciates in value due to the efforts of either spouse during the marriage.
When high-net-worth couples divorce in Missouri, the financials can become more complex. The state’s equitable distribution system requires courts to consider numerous factors, making the forensic accountant’s role even more crucial. For instance, in households in or around the 90th percentile for household wealth, which was valued at $1.6 million, it can be difficult to know for sure where and what the funds are. Missouri courts must evaluate each spouse’s economic circumstances, their respective needs, and their contributions to the acquisition of marital property.
The Role of the Forensic Accountant in Missouri Divorces
In high-asset divorces, and sometimes other divorces, a forensic accountant is called in to investigate the marital property and the separate property of the couple’s assets. Under Missouri’s equitable distribution framework, the forensic accountant’s job becomes particularly important because the court needs a complete and accurate picture of all marital assets to make a fair division. The forensic accountant’s primary responsibilities include uncovering hidden assets, tracing all sources of income and spending, evaluating business interests, and verifying that everything is accounted for and disclosed in the divorce case.
A forensic accountant working on a Missouri divorce case will typically begin by scrutinizing all available financial records, including bank statements, tax returns, credit card statements, and business ledgers. They also examine investment accounts, retirement plans, and any business ownership interests. Given Missouri’s approach to property division, the forensic accountant must also trace and identify marital property from separate property, which can be particularly challenging when assets have been commingled over the years.
The search for evidence of hidden assets or unreported income forms a crucial part of the forensic accountant’s work. They look for unusual patterns in spending, unexplained transfers of funds, and discrepancies between reported income and lifestyle. This is especially important in Missouri because the court’s equitable distribution analysis depends on having a complete understanding of both spouses’ financial circumstances.
Asset valuation represents another key responsibility, as the forensic accountant must determine the fair market value of various holdings such as stock options, retirement accounts, pensions, real estate property, investment ventures, and businesses. In Missouri, this valuation is particularly important because the court may award different percentages of different assets to each spouse based on various equitable factors.
The forensic accountant may also assist in determining appropriate spousal support (i.e., maintenance) and child support payments by providing detailed analyses of each spouse’s income, expenses, and financial capacity. Missouri law requires child support calculations to follow specific guidelines, while spousal maintenance (alimony) depends on factors such as the financial resources of each party, the time necessary for the receiving spouse to acquire education or training, and the standard of living established during the marriage.
When necessary, forensic accountants serve as expert witnesses in Missouri divorce proceedings, testifying in circuit court to explain discrepancies in marital financial reports. Their professional testimony can be crucial in helping judges understand complex financial situations and make informed decisions about property division and support obligations.
Who Needs a Forensic Accountant in Missouri?
Not everyone going through a divorce in Missouri needs a forensic accountant, but certain circumstances make their services particularly valuable. You might need one in your divorce case if one spouse was significantly wealthier before the marriage, as this situation often creates complex issues around distinguishing separate property from marital property, especially if pre-marital assets have appreciated or been commingled during the marriage.
Similarly, cases where one spouse earns significantly more than the other often benefit from forensic accounting services. Missouri’s equitable distribution system considers the economic circumstances of each spouse, so having a clear picture of earning capacity and financial resources is essential. Complex financial holdings such as investments, trusts, and offshore assets almost always require professional forensic analysis, as these instruments often involve intricate ownership structures and valuation challenges that exceed the expertise of typical divorce attorneys.
Suspicion of hidden income or assets represents another common reason to engage a forensic accountant. Missouri law requires full financial disclosure in divorce proceedings, and courts take a dim view of spouses who attempt to hide assets. A forensic accountant can uncover concealed wealth and ensure that all marital property is properly identified and valued.
When child support or spousal support agreements become contentious or stuck in negotiation due to discrepancies in financial reports between the opposing sides, a forensic accountant can provide the objective analysis needed to move the case forward. Their professional evaluation can help resolve disputes about income, expenses, and financial capacity.
Cases involving extensive commingled assets, where separate and marital property have become mixed together over the years, particularly benefit from forensic accounting expertise. Missouri courts must determine which portions of commingled assets should be classified as separate versus marital property, a process that often requires detailed tracing and analysis.
Professional Standards and Confidentiality Considerations
An important consideration for Missouri residents involves the question of privilege and confidentiality when working with forensic accountants. Unlike the attorney-client privilege, there is no specific accountant-client privilege in Missouri family law cases. However, some conversations between you and your accountant may be protected if your attorney contracts the accountant to work on your case as an agent of your attorney. This arrangement can provide some protection under the attorney work-product doctrine, but it’s essential to confirm exactly what you can discuss with the accountant, as they can potentially be called to testify in certain situations.
Forensic accountants maintain professional obligations under various certifying bodies, including the Institute of Certified Forensic Accountants. Members of professional organizations must agree to comply annually with requirements that include meeting their clients’ needs, upholding integrity, objectivity, and independence, and maintaining their responsibility to their profession and the public. These ethical standards provide additional assurance of professional conduct when forensic accountants serve as expert witnesses in Missouri divorce cases.
The Investigation Process
The forensic investigation process in Missouri divorce cases typically involves a comprehensive review of all financial records. The forensic accountant examines bank statements, credit card statements, and increasingly important virtual accounts such as CashApp, PayPal, or Venmo. They also review tax returns, investment accounts, business records, and any other documentation that might reveal the couple’s complete financial picture.
The accountant compares spending habits against reported income and assets, looking for inconsistencies that might indicate hidden wealth or unreported income. Experienced forensic accountants develop keen skills at spotting patterns that appear suspicious, such as unusual cash withdrawals, unexplained transfers to third parties, or lifestyle expenses that exceed reported income.
This detailed analysis proves particularly valuable in Missouri’s equitable distribution system, where courts need comprehensive financial information to make fair property division decisions. The forensic accountant’s findings can significantly impact the final divorce settlement, ensuring that both spouses receive their fair share of marital assets while properly protecting non-marital property rights.
Conclusion
The role of forensic accountants in Missouri divorce proceedings continues to grow in importance as financial holdings become more complex and sophisticated methods of hiding assets emerge. While not every divorce requires these specialized services, high-asset cases and those involving suspected financial deception can benefit significantly from professional forensic analysis. If you have an experienced divorce attorney, they can advise whether your case would benefit from forensic accounting services and can typically recommend qualified professionals from their network of trusted experts. The investment in forensic accounting services often pays dividends in ensuring fair property division and accurate support calculations under Missouri’s equitable distribution system.
If you’re facing a divorce in Missouri, our experienced family law team is ready to help protect your financial future. We serve clients throughout the St. Louis area, including Creve Coeur, St. Charles, and O’Fallon, and we’re prepared to discuss the unique circumstances of your case.