Determining a fair division of assets in a divorce is challenging. Sometimes, the issues come from the complexity of their holdings. In other cases, one or both spouses try to hide assets to avoid sharing them with their partner.
The high-asset divorce lawyers at The Riley Divorce & Family Law Firm could assist high-net-worth spouses in obtaining a fair property division. However, tracing hidden assets to their source requires specialized training and expertise. The role of forensic accounting in Toronto high-asset divorce cases is to verify financial disclosures and find any assets a spouse might have tried to shield from the other. When you and your spouse have considerable assets, work with a lawyer like Paul Riley, who has a network of experts.
Financial disclosure is a critical component of the divorce process. Each spouse must complete Form 13.1, which requires them to report the net value of their assets on the date of marriage, separation, and the day they completed the statement.
Form 13.1 requires substantial supporting documentation, including:
Reviewing these documents for accuracy requires substantial time and expertise. A Toronto family lawyer might ask a forensic accountant to review the disclosure in a high-asset divorce case. A forensic accountant has the training to find red flags that someone without this specialized knowledge might miss.
Hiding assets is not easy, but it is easier for couples with significant wealth. For example, a spouse with a business could inflate their labor costs by putting friends on the payroll or creating ghost positions. They could invest in business infrastructure and accelerate depreciation schedules or create a paper trail indicating higher expenses or lower revenues. Investment portfolios, family trusts, and other entities offer the opportunity for a spouse to conceal wealth.
A Toronto forensic accountant could manage a high-asset divorce case, as they are a Chartered Professional Accountant with an additional Certification in Financial Forensics (CFF). They have advanced training in inspecting financial records, investigating irregularities, and tracing missing assets.
Forensic accountants often examine years of records. People may hide assets from their spouse years before a separation occurs. Forensic accountants follow up on every new account, offshore transaction, or money transfer to reconstruct the spouse’s financial life over the years. They examine a spouse’s spending habits and lifestyle to glean information and note any discrepancies between the spouse’s stated and apparent financial position.
Lying on a financial disclosure form is fraud on the court, and a judge can impose fines and penalties when it is proven that a spouse intentionally submitted an inaccurate disclosure. A false disclosure also could slant the property division in the other spouse’s favor.
The Ontario Family Law Act s. 5(6) allows deviation from a 50/50 net family property division when a judge holds that an equal division would be excessive. Judges can use this provision to justify unbalanced property awards when a spouse incurs significant debt or dissipated assets to reduce their net family property. The law also identifies a failure to accurately disclose debts or liabilities during marriage as justification for a share variation.
Although the statute does not list intentionally submitting a false Form 13.1 as a justification for a share variation, a judge could find the act immoral and penalize the wrongdoing spouse by awarding the other a share variation. A Toronto divorce lawyer could present proof from a forensic accountant demonstrating the intention to hide assets when seeking a share variation.
Providing excellent legal services to divorcing couples with significant wealth means understanding the role of forensic accounting in Toronto high-asset divorce cases. The lawyers at The Riley Divorce & Family Law Firm have a network of valuation experts, appraisers, and forensic accountants available to verify financial disclosures and ensure an appropriate valuation of the net family property.
Consult Paul Riley for advice about managing your high-asset divorce. He is available to provide advice and guidance 24/7. Get started today.
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