The Pitfalls of Inadequate Tracing in Divorce Proceedings: A Recipe for Financial Loss

One crucial aspect of ensuring your client gets the best settlement is the process of accurate tracing, which involves identifying and quantifying marital and non-marital assets to ensure a just distribution. Unfortunately, when tracing is done incorrectly or inadequately, it can lead to significant financial losses for one or both parties involved. In this article, we will explore the potential consequences of improper tracing during divorce proceedings, highlighting the importance of investing in the professional assistance of a skilled and experienced forensic accountant to safeguard your financial interests.

1. Inequitable Asset Distribution:

Improper tracing may result in a skewed division of assets. Failing to determine which assets are marital or non-marital accurately can lead to the misallocation of property. This can mean that one spouse receives a larger share of the marital estate, resulting in significant financial loss for the other party.

2. Hidden Assets:

Without rigorous tracing, it becomes easier for one spouse to hide assets intentionally. Disguising assets by transferring them to third parties, offshore accounts, or dissolving businesses can make them difficult to detect. In such cases, the spouse attempting to conceal assets gains an unfair advantage, potentially resulting in significant financial loss for the other party, who may be unaware of these hidden assets.

3. Overlooking Debts and Liabilities:

Tracing is not limited to assets alone; it also involves accurately identifying marital debts and liabilities. Failing to trace liabilities properly can lead to a disproportionate allocation of debts, burdening one spouse with more financial responsibilities and ultimately leading to a significant loss in the long run.

4. Value Underestimation:

Inadequate tracing can lead to an underestimation of the value of certain assets. Disregarding accurate valuation methods, such as consulting appraisers or financial experts, means settling for unjust valuations. Consequently, one party may suffer financial loss by accepting an undervalued asset or paying an excessive amount to retain their fair share.

5. Ineffectiveness of Legal Remedies:

When tracing is done poorly, the court may not have sufficient evidence to enforce the fair distribution of assets. In such cases, legal remedies become ineffective or complicated. This can result in lengthy legal battles and financial losses for both parties.

6. Missed Opportunities for Asset Protection:

Tracing is not just about dividing assets and liabilities; it’s also an opportunity for asset protection. Identifying marital and non-marital assets accurately allows spouses to take steps to safeguard their financial interests. Failure to trace effectively may result in missed opportunities to claim certain assets or protect them from further financial vulnerabilities.

Conclusion:

Hiring Sage Investigations, a skilled and experienced forensic accountant, to conduct comprehensive tracing will ensure you have the evidence needed to obtain the best settlement for your client. Sage Investigation has a proprietary software technology that analyzes this complex data quickly and efficiently, generating evidence-based reports in less than half the time than a person.

Call Sage Investigations, LLC at 512-659-3179 for a free 20-minute consultation when you have a divorce client. Let Sage shed light on the truth for your clients. We look forward to hearing from you and building a solid relationship you can count on. Click to read about the Sage Team and their CVs.