Divorce is one of the most upsetting and damaging social phenomena across the globe and it affects individuals, extended families and it is especially hard on children.
The statistics are quite staggering. It is expected that 42% of marriages will end in divorce and there are 13 divorces an hour in England and Wales, while 50% of divorces happen within the first ten years of marriage (Office of National Statistics 2012). The average age of a divorcee is 45 for men and 42 for women and 71% of divorces are first marriages. Surprisingly only one in seven divorces are granted because of adultery. Divorces were most likely to happen between the 4th and 8th year of marriage and over 50% of divorcing couples have a child under the age of 16.
Whatever the circumstances of a divorce and whoever is to blame, there is an enormous emotional and financial cost to both parties and it is very common that even if a couple sets out to pursue an “amicable” divorce; that is, without a lawyer and the minimum emotional wrangling, trying to keep the family peace as much as possible, even this will end in acrimony. When the relationship is over, couples will ‘fight’ over the children, the pets, possessions, business interests, property, the family treasures that they have collected together and above all – money!
Consequently there is much work to do for forensic accountants who need to systematically determine the true worth and assets of both sides of the marriage. This can sometimes be through a painstaking trail of companies and bank accounts – sometimes as far afield as the Cayman Islands, Gibraltar or Switzerland… as one partner tries to hide their true worth and asset from their spouse in an attempt to pay less money in maintenance.
At Frenkels Forensics, we are regularly instructed to act as expert forensic accountants to carry out an investigation into various issues when a couple are going through a divorce by either the individual spouse or their legal representative. The two main areas of forensic accounting are ‘valuation work’ and ‘asset tracing’- and there is quite an overlap between the two services.
In order for the divorce court to make the correct ruling on custody and how to split up the assets held within a marriage, it is important for them to establish the true worth of each individual. If either party in the divorce owns shares in a business that they (either majority or minority shareholding), it will need valuing properly for the divorce. Frenkels have recently valued businesses as far ranging as restaurants, hairdressers, accountancy practices, dental practices and property businesses; and very often the valuation of businesses abroad.
It is common in a divorce for one of the parties to not declare all of their income / assets accurately or honestly. Frenkels are usually instructed to detect these and to properly ascertain an individual’s wealth or income. This includes the unravelling of complex and ‘deliberately obstructive’ accounting processes such as those held in tax havens, trust funds and obscure family names.
At Frenkels Forensics, we are used to dealing with the very sensitive issues that arise in matrimonial disputes and divorces – and are very careful not to aggravate the already difficult circumstances which divorcing parties may find themselves in.
By Vitek Frenkel – find me via Google+