Division of Property

Each dissolution of marriage proceeding requires (unless agreed to mutually by the parties) that the amount of community property and community obligations be equally divided. Equal division can be accomplished by dividing each particular asset between the parties or by awarding one asset to one party and an asset or assets of equal value to the other. If one party assumes the obligation for a community debt, that debt will usually be deducted from the value of assets awarded to him or her in computing the equal division requirements. A Court Judgment which requires one party to pay a particular bill will not relieve the other party of the obligation, in the event of default if it is a joint obligation.

Those assets acquired by you prior to your marriage are usually confirmed to you as your sole and separate property, free and clear of any interest of your spouse. So also are those assets you acquire after the date of separation.

Those assets accumulated by you during the course of the marriage are generally characterized as community property. Community property assets are normally divided equally between the husband and the wife.

There are certain exceptions as follows:

Gifts
Inheritances; and,
Personal injury awards.

Forensic Accounting Often, a person will claim to his spouse that his income is very low and that his assets are minimal; the personal financial statement submitted to the bank often shows a different picture. It may reflect income and assets that the other spouse was not aware of. One then has to conduct further analysis to determine the true reality. The most common situation related to underreporting of assets and income occurs when a dishonest spouse controls a closely held business. Ways to manipulate financial information and results are only limited by the spouse's imagination. There are, however, recurring patterns in how business owners understate income, assets, and the related value of their closely held businesses. These patterns generally fall into two broad classifications.

Questionable Transactions

Unreasonable owner salary levels
Automobile write-offs
Personal expenses written off as business expenses
Petty cash abuses
Inventory abuses
Large one-time purchases written off
Things that temporarily drive a business into decline

Sham Exchanges

Self-dealing and inter-family dealings
Sudden increases in cost of supplies
Sudden appearance of new suppliers or new customers
Sudden decrease in gross income
New or hidden bank accounts
Delaying income until after the divorce
Fraudulent bad debt write-offs
Unreported cash transactions

The above list of potential fraud areas should be considered when dealing with dishonest spouses and is not by any means an all-inclusive listing.

Forensic Accountant's Role

When dealing with a dishonest spouse, the attorney and accounting expert need to work together closely from the outset of a case. The types of data needed will often exceed information regularly obtained in mandatory disclosures and the methodologies used by the accounting expert will need to be cost effective and coordinated with the discovery process. Successfully uncovering the omissions of a dishonest spouse requires a high level of experience and tenacity by the accountant/attorney team.

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Division of Property Los Angeles

Division of Property