The exercise of tracing where the money came from is fundamental to a proper characterization and division of the community estate in a divorce. Spouses often commingle and use their separate and community property funds interchangeably with little thought to the consequences of their laissez-fare attitude. People who once paid no attention will demand accountability for “their” separate property when a marriage ends. The demand for accountability and the proliferation of second and third marriages has raised financial tracing to be a vital yet complicated and often misunderstood piece of family law cases. Many jurisdictions lack guidance on what a proper tracing might look like and thus rely heavily upon the analysis and testimony of financial experts.
Common tracing tasks include:
Confirmation of Assets and Liabilities as of certain relevant dates (Balance Sheet)
Establishment of separate property claims
Confirmation of commingling of separate and community property
Determination of Income available for Child and Spousal Support
Analysis of Marital Standard of Living
Establishment of requests for reimbursements and credits
Finding hidden assets
Analysis of financial infidelity
Breach of fiduciary duty
We will review the general principles, various methods and the elements of completing a financial tracing for divorce and family law related matters over the coming months including some of the common tracing tasks detailed above. Unfortunately we can not offer you a how to in order to do it yourself but we can offer a primer on what to think about so you can begin to do your own risk reward analysis before escalating your dispute with unsubstantiated claims for separate property.
Decisions such as these could play a significant role in your post-divorce future. Hiring an experienced CDFA will ensure a more secure, comfortable future for YOU. Make sure you sit down with one at PDM before finalizing your settlement agreement.