Divorce can leave you questioning almost everything about your finances:
- You may see a transfer you don’t recognize.
- You may wonder whether you know everything about investment accounts.
- Or perhaps your spouse handled most of the finances, and you’re concerned there could be assets or income you don’t know about.
Does that mean you need to hire a forensic accountant? Not necessarily.
As a Certified Divorce Financial Analyst® (CDFA®), one misconception I hear is that you automatically need a forensic accountant if you’re concerned about hidden assets during your divorce.
There are situations where forensic accounting can be extremely valuable. But before adding another specialized professional and another expense to your divorce team, it helps to understand what you’re trying to find out.
A good place to start is often much simpler: get organized, review what you already have, and identify what doesn’t make sense. When we work with clients on divorce financial planning in San Antonio, we encourage them to gather their financial records and look for accounts, transfers, transactions, or other activity they don’t recognize or understand.
The goal isn’t to assume something is wrong, but to separate what you know from what you don’t, and develop specific questions to discuss with your attorney or divorce financial professional before deciding whether a deeper investigation is warranted.
👉 Read Financial Planning for Life Changes.
What Does a Forensic Accountant Do During a Divorce?
A forensic accountant examines financial records to identify discrepancies, trace money, evaluate income, analyze business finances, and investigate whether assets or income may not have been fully disclosed.
Depending on the circumstances, that could include reviewing:
- Bank and brokerage accounts
- Tax returns
- Business financial statements
- Credit card activity
- Transfers between accounts
- Executive compensation
- Real estate transactions
- Loans or liabilities
- Other financial entities or holdings
This is specialized work, and the cost can be high. Forensic accountants commonly charge several hundred dollars per hour, with rates ranging from $250 to $600 or more, depending on experience, location, and case complexity.
A full engagement can cost several thousand dollars and significantly more when business valuations, extensive asset tracing, depositions, or expert testimony are involved.
That’s why the question isn’t simply, “Could a forensic accountant find something?”
A better question may be: “Is there enough financial uncertainty to justify a deeper investigation?”
Watch: “How Do I Know if I Need a Financial Advisor?”
Should You Review Your Finances Before Hiring a Forensic Accountant?
In many cases, yes. One of the first pieces of homework we give clients is surprisingly straightforward.
Review your financial statements. You don’t have to become a financial detective. You’re simply looking at your finances through a different lens. Even if you haven’t been the person paying the bills or managing investments, you’ve lived with your household finances. You probably have some idea of what your family’s normal spending and saving patterns look like.
Start with bank statements, credit cards, tax returns, investment statements, loan documents, and other financial records you can access.
- Do I recognize this transaction?
- Is this spending consistent with what I normally see?
- Where did this transfer go?
- Do I recognize this financial institution?
- Why did this account balance change?
- Is there income shown on our tax return that I don’t fully understand?
- Are there accounts or investments I haven’t seen before?
You’re not trying to prove that your spouse did something wrong. You’re identifying questions that may deserve answers.
What Financial Red Flags Could Warrant a Closer Look?
Sometimes an important financial question starts with something relatively small.
- Perhaps you notice a recurring transfer to an account you don’t recognize.
- Maybe there are contributions to an investment company you’ve never heard discussed.
- You might find withdrawals that seem inconsistent with your household’s normal spending.
- Or your tax return may show income, investments, business interests, or other financial activity you don’t fully understand.
None of these automatically means money is being hidden. But they give you something specific to discuss with your attorney rather than beginning with a general suspicion that something must be wrong. And sometimes your review reveals nothing unusual, which is useful information, too.
Read: “How to Financially Prepare For a Divorce.”
When Might a Forensic Accountant Be Worth Considering?
Every divorce is different, so this is a conversation to have with your attorney. However, there are circumstances in which specialized financial investigation may be warranted.
- Your spouse owns a business. Business ownership can introduce questions about income, expenses, valuation, retained earnings, and personal expenses paid through the company.
- There are large or unexplained transfers. Significant movement of money without an obvious explanation may warrant additional questions.
- Financial records are incomplete. Missing statements, inconsistent records, or gaps in documentation can make it harder to understand the complete financial picture.
- You have concerns about undisclosed assets or income. A forensic accountant may be able to trace transactions and examine records in greater detail.
- Your finances are unusually complex. Multiple businesses, partnerships, trusts, investment accounts, real estate holdings, or executive compensation can add layers of complexity.
The financial stakes justify the expense. The potential financial issue should be considered relative to what an investigation could cost.
A forensic accountant generally isn’t needed simply because a divorce is contentious. The stronger reason is that specific financial questions require expertise beyond ordinary financial review and legal discovery.
Watch our new podcast: “Why It’s Time to Pivot.”
What’s the Difference Between a CDFA® and a Forensic Accountant?
A San Antonio CDFA® and a forensic accountant can both play important roles in a divorce, but they generally address different financial questions.
- A forensic accountant typically looks backward. The focus may be on tracing money, analyzing financial records, identifying discrepancies, examining business finances, or investigating undisclosed income or assets.
- A CDFA® generally helps you understand the financial implications of your divorce decisions. That may include evaluating assets, cash flow, retirement accounts, housing decisions, taxes, settlement scenarios, and how today’s decisions could affect your finances after the divorce.
For example, knowing that a couple has two $500,000 retirement accounts doesn’t necessarily tell you whether those accounts have the same financial characteristics. Taxes, withdrawal rules, account types, and other factors can matter when evaluating a proposed settlement.
The professionals aren’t substitutes for one another. Depending on your circumstances, they can have complementary roles.
Download our eBook: “Going Through a Divorce? 10 Financial Decisions to Consider Before You Move Forward.”
How Can Emotions Affect Financial Decisions During Divorce?
Divorce isn’t simply a financial transaction. It’s very personal. This is where we believe the behavioral side of financial planning matters. Rather than allowing every unfamiliar number to become evidence of wrongdoing, we can slow the process down and ask:
- What do we actually know?
- What don’t we know?
- And what information would help answer the question?
Separating emotion from evidence can help you develop more focused questions for your attorney and other professionals.
Who Should Be on Your Divorce Financial Team?
We often tell clients that divorce is a team sport. No single professional has all the answers because the legal and financial issues involved are different.
Your divorce attorney provides legal advice, represents your legal interests, and guides decisions involving discovery and the legal process.
A forensic accountant may investigate complex financial issues when specialized accounting analysis is warranted. Ultimately, whether to hire a forensic accountant should be discussed with your divorce attorney.
Your attorney can evaluate the legal issues involved, what information can be obtained through discovery, whether additional financial analysis could be useful, and whether the potential value of that investigation warrants its cost.
How Can PAX Financial Group Help With the Financial Side of Divorce?
At PAX Financial Group, we recognize that divorce can change much more than your marital status. It can affect your cash flow, investments, retirement strategy, taxes, housing decisions, insurance, estate planning, and the way you think about money going forward.
“As a San Antonio CDFA®, my role isn’t to replace your attorney or forensic accountant. It’s to help you better understand the financial decisions you’re facing and how they may fit into your life after divorce.” – Monica Cervantes MSA, BFA™, CDFA®
Schedule a conversation with PAX Financial Group to discuss the financial questions surrounding your divorce and determine what information may be helpful as you work with your legal team.
Frequently Asked Questions About Forensic Accountants and Divorce
Do I need a forensic accountant if I think my spouse is hiding money?
Not automatically. Start by documenting the specific reasons for your concern and discussing them with your attorney. Your attorney can help determine whether legal discovery may answer those questions or whether specialized forensic accounting should be considered.
How does a forensic accountant find hidden assets in a divorce?
Forensic accountants may analyze bank records, tax returns, business records, investment accounts, transfers, income, expenses, and other financial documents to trace funds or identify inconsistencies. The appropriate scope depends on the circumstances of the divorce.
Is a forensic accountant worth the cost during a divorce?
That depends on the complexity of your finances, the questions at issue, the potential amount at stake, and the expected cost of the investigation. Your attorney can help you weigh those factors.
Do you need a forensic accountant when a spouse owns a business?
Business ownership can complicate divorce finances, but it doesn’t necessarily mean forensic accounting is necessary. Questions involving business income, valuation, expenses, ownership interests, or incomplete records may make specialized accounting analysis more relevant.
What’s the difference between a CDFA® and a forensic accountant?
A forensic accountant typically investigates financial records and transactions. A CDFA® focuses on helping you understand the financial implications of divorce decisions, including assets, income, taxes, retirement accounts, housing, and post-divorce planning.
Can a CDFA® find hidden assets?
A CDFA® can help review and organize financial information and identify questions or inconsistencies that may deserve further attention. Formal investigation or tracing of potentially hidden assets may require a forensic accountant and should be coordinated with your attorney.
When should I talk to a CDFA® during a divorce?
You don’t necessarily have to wait until a settlement is being negotiated. A CDFA® can be helpful when you’re gathering financial information, considering settlement scenarios, evaluating assets, or beginning to think about what your finances could look like after divorce.
