Big Divorce Mistake #3: Not Getting the Holy Grail of Divorce Documents
The Forensic Accounting Deskbook by Miles Mason, Sr. JD, CPA, published by the ABA Family Law Section
Loan applications often contain a statement of income and net worth. Lying on a loan application can be a felony. Personal financial statements, also called a net worth statement, is often the most valuable tool for negotiating a favorable settlement. A personal financial statement is a document or spreadsheet outlining an individual’s financial position at a given point in time. A personal financial statement will typically include general information about the individual, such as name and address, along with a breakdown of total assets and liabilities.
For a much more detailed discussion, see The Forensic Accounting Deskbook: A Practical Guide to Financial Investigation and Analysis for Family Lawyers, Second Edition, authored by Miles Mason, Sr. 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.
See Mason’s complete list of the 10 Big Divorce Financial Mistakes.
VIDEO TRANSCRIPT:
Tracy Coenen: Obviously during discovery there are some basic documents that most attorneys are going to request in a divorce case, such as bank statements, credit card statements, income tax returns, but I know there are some less obvious documents of a financial nature that might be requested and could be very valuable in a case. Can you tell us about those?
Miles Mason: Right, and pretty obvious to the forensic accountant, but the first thing I want, what I refer to as the Holy Grail of documents, is the loan application, the financial statement that goes with a loan application to a credit facility, especially if the person is a self-employed business owner and needs capital. That financial statement, that loan application, is usually going to draw a pretty rosy picture. Not always, but sometimes. I like insurance policies as well, because sometimes you have to justify a large insured amount, and there needs to be an insurable interest, so the insurance companies will ask for financial information.
I love public record searches, such an amazing amount of information. A great, great document that’s out there is a UCC-1, which lists secured assets against a particular loan. That’s a great way to find a loan application and a financial statement. Then of course, subpoenas to third parties, whether it be for the loan applications, employers, casinos as well. The great thing about what makes forensic accounting so exciting in my divorce practice is that we’re only limited by our imagination.
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.
