How Are Forensic Accountants Used in California Divorce Proceedings?
California Divorce

How Are Forensic Accountants Used in California Divorce Proceedings?

What is a forensic accountant, and when should one be used in divorce or legal separation proceedings? A forensic accountant is a hybrid of an investigator and an accountant. The typical forensic accountant holds a traditional accounting degree, which provides core knowledge in the area of accounting, as well as investigations training, which enables the performance of effective, enhanced investigations. Forensic accounting can be critical in locating, classifying, and valuing assets and debts.

Divorce and separation proceedings provide for the winding up, so to speak, of a couple’s marriage. In these proceedings, all assets and debts are identified and divided, and provisions are often made for spousal or partner support, as well as child support. For the winding up to be fair and equitable, all assets and debts must be identified. This can be difficult in any case, as our economy becomes more diversified and global. A forensic accountant may be used in complex matters, such as helping to identify and value retirement plans, stock options, trusts, deferred compensation plans, and business interests.

Additional challenges will be present if one spouse is intentionally untruthful in an attempt to understate income or overstate debt, such as in the following examples:

  • Attempting to show less income or fewer assets;
  • Hiding income or cash streams;
  • Transferring or hiding assets;
  • Padding business payroll; and
  • Creating fictitious debts or overstating debts.

In cases such as these, the use of a forensic accountant is essential to ensure that you receive proper treatment with regard to support awards and property division. These specialized accountants are experts in tracing funds, and they exercise great discretion in determining where to look for hidden assets and overstated debt. After all, if a court doesn’t know about an asset, it can’t divide it. What’s more, a forensic accountant will present his findings in court, with the assistance of your experienced attorney.

Judy L. Burger’s experience as an aggressive family lawyer is paired with an extensive business background, an invaluable combination in contested divorce and separation proceedings. If you need the assistance of a lawyer who is not afraid to fight in court and who understands complicated financial issues, call her today at (415) 293-8314 or visit her online.

Watts and Jeffries Credits: What Are They and What Do They Mean for Me?
California Divorce

Watts and Jeffries Credits: What Are They and What Do They Mean for Me?

Often, while divorce or legal separation proceedings are pending, one party stays in the family home. The parties sometimes choose to do this to ease the transition for their minor children or to keep their overall expenses down until their final order is entered. Other times, the court will order that one party may stay in the home. Either way, significant financial implications can result from one party staying in the residence, including the application of Watts and Jeffries credits. This blog will explain what these are and when they come into play.

Watts credits and Jeffries credits are named after the court cases that first recognized them explicitly. In the Watts case, the court held that when one party to a divorce has the exclusive use of a community asset, that party may be required to reimburse the other party for that use. For example, if a married couple owns their home as a community asset and the wife stays there after the date of separation, she may have to reimburse the husband for the fair rental value of the home. Watts makes sense because the spouse living in the home is benefitting from a community asset. She does not have to pay rent somewhere else. Likewise, the spouse not living in the home cannot make use of the property himself, nor can he rent or sell it. If you would like to read more about community property, please see our separate blog here.

The Jeffries case may come into play if the parties own the home as a community asset and still owe money on the mortgage. In Jeffries, the court held that mortgage payments made out of the separate funds of the spouse living in the family home may be applied by the court to offset Watts charges. Therefore, in the example above, if the wife, while living in the family home, paid the mortgage out of her current salary, she could ask the court to reduce any amount she owed under Watts with Jeffries credits.

Whether Watts and Jeffries apply is discretionary with the court. In other words, it is the judge’s decision whether or not to grant them, after considering all the circumstances in the case. They area called “charges” when assessed against a party; they are called “credits” or “reimbursements” when they are granted in a party’s favor.

You may also have heard of Epstein credits, which may be implicated when one of the parties uses separate funds to pay for community debts. If you are interested in this concept, please read our earlier blog here.

In all of these circumstances, accurate recordkeeping is essential. Charges and credits can be significant to the financial outcome of a divorce or legal separation. They require accurate documentation and an aggressive, knowledgeable lawyer. Judy L. Burger has extensive experience in high conflict divorces in Northern California. Contact her today at (415) 293-8314.