How a Lifestyle Analysis is Your Loaded Gun in Alimony Negotiations
The Forensic Accounting Deskbook by Miles Mason, Sr. JD, CPA, published by the ABA Family Law Section
A lifestyle analysis can alter the relative negotiating strength of the parties to a divorce. For more information, see Lifestyle Analysis | Alimony in Tennessee Divorce Law.
There is an entire chapter devoted to Lifestyle Analysis in The Forensic Accounting Deskbook: A Practical Guide to Financial Investigation and Analysis for Family Lawyers, Second Edition, authored by Miles Mason, Sr. JD, CPA and published by the ABA Family Law Section. This updated edition of one the ABA’s most popular resources explains the practice of forensic accounting and business valuation and how to apply it in family law cases. It provides a practice-focused introduction to the core financial concepts in divorce, such as asset identification, classification, and valuation, income determination, expenses, and more.
VIDEO TRANSCRIPT:
Tracy Coenen: How do you use a lifestyle analysis from a forensic accountant when you’re fighting a divorce?
Miles Mason: The lifestyle analysis helps me, because in our alimony cases, we’re working with a list of statutory factors. And one of those factors is lifestyle analysis. Absent the help of a forensic accountant, if I don’t have some of that, I said that information, I have nothing to argue. So, what I’m doing is I’m including the lifestyle of the parties as a factor in my proof of my case in chief, and as well as in settlement negotiations. It helps me prove a spouse’s need, as well as prove the supporting spouse’s ability to pay.
Tracy Coenen: So I do all this work, I’ve got a lifestyle analysis for you, what exactly are you going to do with it in your case?
Miles Mason: Well again, when we’re talking about a settlement, I’m going to take the report and use that in settlement negotiation. Most likely in mediation, share that with a mediator, or share that with the other spouse. And sometimes, especially if I’m representing the supported spouse, and I give a detailed report with all these numbers to the supporting spouse, it gives them really something to think about. Do they really want to go into court with all this information, essentially a gun loaded at their head? Now, but in trial what we’re talking about is, in the legal terms, a spouse’s reasonable need. Okay? Is it higher or lower than what they’re claiming? And we’re comparing the lifestyle of the parties. What’s the historical use of that money compared to their claimed reasonable need? Or we’re also looking at the other spouse’s ability to pay, is it higher or lower? And the lifestyle analysis usually bears out some type of relationship that’s advantageous, or we wouldn’t be doing it. Keep in mind that the lifestyle analysis can be an offensive tool, and we’ve talked about that, but it can also be a defensive tool.
I’ve asked forensic accountants to do lifestyle analysis for the supported spouse before to show that the reasonable need claimed by the supported spouse is completely unreasonable, because there’s no way that lifestyle can be continued. Heck, you probably couldn’t have been afforded in the first standpoint. The five years immediately before the divorce, they were spending too much money, because so much debt came out of it. And that there was so much borrowing that there’s no way to continue that type of spending. So, that could be used more as a defensive tool.
Thank you to Tracy Coenen, CPA, CFF for inviting me to join her in this video series. Tracy is a nationally recognized forensic accountant practicing in Milwaukee and Chicago.
