Should a Financial Forensic Evaluator be Retained in My Divorce Case ?

This Week’s Blog by Carole T. Orland

Should a Financial Forensic Evaluator be Retained in My Divorce Case ?

What is a financial forensic evaluator?

A financial forensic evaluator is typically an individual with certain certifications and qualifications who is educated and trained to analyze financial information in your divorce case. This may include, for example, an analysis of income, or valuation of various assets such as privately held businesses, equity awards, private equity and hedge fund interests, and other alternative investments.

When should a financial forensic evaluator become involved in my divorce case?

Usually a financial forensic evaluator should be retained as soon as counsel recognizes that there may be valuation issues in your divorce case. The evaluator can assist in fashioning pertinent discovery requests and responses. Occasionally there are circumstances where one party will wait to see the other party’s analysis and valuation. A seasoned divorce attorney will be able to guide you through these strategic situations.

Can the parties hire one neutral financial forensic evaluator?

This is possible. In some divorce cases the party will agree on one neutral financial forensic evaluator and further agree to be bound by the conclusions of that expert. In other cases, parties may agree to start with a neutral but retain the right to hire his or her own evaluator, should he/she disagree with the neutral’s evaluation.

What types of documents will the financial forensic evaluator want?

In the case of an income analysis, the forensic financial evaluator may want to review tax returns, pay stubs, year-end pay statements, statements from credit card and bank/brokerage accounts, and employment contracts. With regard to business assets, the financial forensic evaluator will want to look at such items as Profit and Loss Statements, Balance Sheets, General Ledgers, Partnership Agreements, Operating Agreements, corporate/partnership tax returns, K-1s, and business accounts. In the case of alternative investments, it will be important to review documents such as Operating Agreements, investor correspondence and Private Placement Memoranda. And for equity awards such as stock options, RSUs, and Phantom Equity awards, items such as vesting schedules, agreements, and plan documents will require review.

Can I expect the financial forensic evaluator to prepare a report?

Whether a report is to be prepared is up to the party hiring the financial forensic evaluator. Again, experienced divorce counsel will be able to guide you on this aspect of litigation.

Will the financial forensic evaluator testify at my divorce trial?

Typically yes, unless there is an agreement that his or her valuation is stipulated to by the other party or the parties work out a compromise valuation. In order to testify as an expert, a party must formally disclose that expert in advance in accordance with Connecticut Practice Book Rules.

Can the financial forensic evaluator assist my divorce case in other ways?

Absolutely! And most commonly with discovery, depositions, analyzing the opposing party’s valuation, Proposed Orders for the Court, and trial preparation. Ideally he/she will assist in settlement negotiations and a resolution of your divorce case without the need for a trial.

At Broder & Orland LLC with offices in Westport and Greenwich, Connecticut we have extensive experience working with financial forensic evaluators in all facets of divorce litigation.