Up to fifty percent of financial forensic services are performed in divorces, or in family law business valuations. Providing the first definitive publication on family law for accountants, this book addresses topics unique to family law accounting, tax, valuation and practice. The coverage begins with pre-engagement of the client and proceeds through to trial and preparation and presentation. Sample checklists, work papers, and trial exhibits are included. CPAs and attorneys will benefit from this handbook’s tips on providing financial services in the family law arena.
Table of Contents:
Preface. Acknowledgments.
Part I Family Law Litigation And Financial Experts.
Chapter 1 INTRODUCTION.
1.1 Introduction.
1.2 Development Of Property Law.
1.3 U.S. Property Systems.
1.4 Role Of Fault In Divorce.
1.5 Support.
1.6 Property Valuation.
1.7 Property Division.
1.8 Income Tax.
1.9 Marital Fraud.
1.10 Conclusion.
Chapter 2 DIVORCE ASSIGNMENT & THE FINANCIAL EXPERT.
2.1 Initial Contact.
2.2 Engagement Terms And Conditions.
2.3 Case Management.
2.4 List Of Cases.
2.5 Sample Engagement Letter.
2.6 Endnotes.
Chapter 3 PLANNING AND COORDINATING DISCOVERY.
3.1 Introduction – Developing A Roadmap.
3.2 Forms Of Discovery.
3.3 Financial Experts.
3.4 Expert Discovery.
3.5 Evaluation Of Adverse Expert.
3.6 Conclusion.
Part II Child And Spousal Support.
Chapter 4 CHILD AND SPOUSAL SUPPORT.
4.1 Introduction Of Child Support.
4.2 Child Support Factors.
4.3 Child Support Guidelines.
4.4 College And Other Extraneous Expenses.
4.5 Uniform Interstate Family Support Act (Uifsa).
4.6 Full Faith And Credit For Child Support Orders Act (Ffccsoa).
4.7 Introduction To Spousal Support (Alimony).
4.8 Spousal Support Factors.
4.9 Types Of Alimony.
4.10 Income Available For Support.
4.11 Imputation Of Income – Ability To Earn.
4.12 Imputation Of Income – Assets.
4.13 “Double Dipping”.
4.14 Conclusion.
4.15 Endnotes.
Part III Character Of Property.
Chapter 5 COMMUNITY PROPERTY OR EQUITABLE DISTRIBUTION.
5.1 Introduction.
5.2 Definition Of Property.
5.3 Characterization Of Property.
5.4 Division Of Community Or Marital Property.
5.5 Transmutation.
5.6 Pre-Marital Agreements.
5.7 Tracing And Apportionment.
5.8 Endnotes.
Chapter 6 TRACING BANK AND INVESTMENT ACCOUNTS.
6.1 Introduction—Circumstances And Objectives Of Tracing.
6.2 What Constitutes Separate Property And Community Property?
6.3 The Community Property Presumption And The Burden On Separate Property.
6.4 Intent And Fiduciary Duty.
6.5 The Tracing Menu Choices In California.
6.6 Putting On Tracing Evidence At Trial.
Chapter 7 REAL PROPERTY.
7.1 Real Property In Divorce.
7.2 Personal Residence.
7.3 Real Estate Investments.
7.4 Apportionment Of Separate Property Interests.
7.5 Allocation Of Income & Deductions During Pendente Lite Period.
7.6 Endnotes.
Chapter 8 RETIREMENT AND PENSION PLANS IN DIVORCE.
8.1 Definitions.
8.2 Defined-Benefit (Db) Plans.
8.3 Defined Contribution (Dc) Plans.
8.4 Hybrid Plans.
8.5 Other Retirement Accounts: Individual Retirement Accounts.
8.6 Annuities In Divorce.
8.7 Keogh (Or Hr-10) Plans.
8.8 Endnotes.
Chapter 9 QDROS.
9.1 Retirement Plan Basics.
9.2 Common Qdro Issues And Problems.
9.3 Conclusion
9.4 Endnotes.
Chapter 10 EQUITY BASED COMPENSATION – STOCK OPTIONS.
10.1 Introduction.
10.2 Fundamental Issues Which Need To Be Addressed.
10.3 What Are Stock Options?
10.4 Option Valuation Overview.
10.5 A Black-Scholes Valuation Exercise.
10.6 Options As Marital Property.
10.7 Taxation Of Options.
10.8 Distribution Of Options.
10.9 Conclusion.
10.10 Resources.
10.11 Endnotes.
Chapter 11 SEPARATE BUSINESS INTERESTS.
11.1 Introduction.
11.2 Investment Of Community Funds.
11.3 Personal Efforts During Marriage.
11.4 Reasonable Compensation Method In California -Van Camp Apportionment Of Community And Separate Property Interests.
11.5 Post Separation Change In Value.
11.6 Selection Of Method - Pereira Or Van Camp.
11.7 Equitable Apportionment.
11.8 Endnotes.
Part IV Business Valuations.
Chapter 12 PROFESSIONAL STANDARDS.
12.1 Introduction.
12.2 The Early Years.
12.3 Other Valuation Standards.
12.4 Application Of Standards To Valuations For Family Law.
12.5 Detail Of The Consulting Standard.
12.6 AICPA General Professional Standards.
12.7 Statement Of Standards For Valuation Services No. 1.
12.8 The Developmental Standards.
12.9 The Reporting Standards.
12.10 Reporting Exemption For Certain Controversy Proceedings.
12.11 Appendices And Interpretation 1-01 To SSVS1.
12.12 Accreditation Of Valuation Experts.
12.13 The Future.
12.14 Endnotes.
Chapter 13 PREMISE AND STANDARDS OF VALUE.
13.1 Premise Of Value.
13.2 Standard Of Value.
13.3 Endnotes.
Chapter 14 DETERMINING ENTERPRISE VALUE.
14.1 Determining The Subject Company Equity Value.
14.2 Valuation Approaches And Methods.
14.3 Qualitative And Quantitative Analysis.
14.4 Normalizing The Benefit Stream.
14.5 Developing The Discount Rate Using The Build-Up Method.
14.6 Developing The Discount Rate Using The Modified Capital Asset Pricing Model.
14.7 Difference Between The Capitalization And Discount Rate.
14.8 Long-Term, Sustainable (Perpetual) Growth Rate.
14.9 Reconciling The Results.
14.10 Non-Operating Assets And Liabilities.
14.11 Endnotes.
Chapter 15 ENTERPRISE, PERSONAL, BUSINESS & CELEBRITY GOODWILL.
15.1 Definitions Of Enterprise And Personal Goodwill.
15.2 Difference Between Goodwill And Other Types Of Intangible Assets.
15.3 Why The Need To Differentiate
15.4 Differing Standards Of Value And Their Effect On The Goodwill Issue.
15.5 Qualitative Differences Between Personal And Enterprise Goodwill.
15.6 Quantitative Analysis – Allocating Between Personal And Enterprise Goodwill.
15.7 Celebrity Goodwill.
15.8 Conclusion.
15.9 Endnotes.
Chapter 16 OWNER AGREEMENTS' IMPACT ON BUSINESS VALUE.
16.1 Overview.
16.2 Legal Entities.
16.3 Customary Terms To Agreements.
16.4 Premises & Standards Of Value.
16.5 Controlling And Non-Controlling Equity Interests.
16.6 Impact Of Agreement Terms On Value And Examples.
16.7 Summary.
16.8 Endnotes.
Chapter 17 PREMIUMS AND DISCOUNTS.
17.1 Introduction.
17.2 Entity-Level And Shareholder-Level Valuation Adjustments.
17.3 Control And Discount For Lack Of Control Or Minority Interest Discount.
17.4 Elements Of Control.
17.5 Market Evidence For Control And Acquisition Premiums.
17.6 Marketability And Liquidity.
17.7 Discount For Lack Of Marketability (“Dlom”).
17.8 Overall Conclusions.
17.9 Endnotes.
Part V Trial Or Settlement.
Chapter 18 DIVIDING THE MARITAL ESTATE.
18.1 Introduction.
18.2 Important Dates.
18.3 The Marital Balance Sheet And Proposed Property Division Schedules.
18.4 Property Disposition Options - Settlement Vs. At Trial.
18.5 Other Specific Issues And Considerations.
18.6 Conclusion.
18.7 List Of Cases.
18.8 Endnotes.
Chapter 19 PREPARING FOR TRIAL.
19.1 Introduction.
19.2 Expert Depositions.
19.3 Pre-Trial Motions.
19.4 Voir Dire And Methodology.
19.5 Preparing Your Expert For Testifying
19.6 Conclusion.
19.7 Endnotes.
Part VI Alternative Dispute Resolution.
Chapter 20 COURT OR NEUTRAL EXPERT.
20.1 Introduction: The Role Of The Neutral, Joint, Or Court Expert.
20.2 Considerations Before You Accept The Engagement.
20.3 Considerations While Serving As The Court's Expert.
20.4 Considerations When Delivering Your Findings.
20.5 Practical Tips.
20.6 Language And Content Of Court Orders.
20.7 Conclusion.
20.8 Summary Of Cases.
20.9 Sample 730 Order.
20.10 Endnotes.
Chapter 21 MEDIATION AND DISPUTE RESOLUTION.
21.1 Introduction.
21.2 Forms Of Dispute: Resolution And Mediation.
21.3 Fundamental Mediation Blocks.
21.4 Programs And Providers.
21.5 Preparation And Participation.
21.6 Conclusion.
21.7 Endnotes.
Chapter 22 COLLABORATIVE LAW.
22.1 Introduction.
22.2 The Collaborative Process – Isn't This Just Like Mediation?
22.3 The Collaborative Professionals – Building A Professional Team.
22.4 The Financial Professional.
22.5 The Collaborative Contract.
22.6 Disclosure In The Collaborative Process.
Chapter 23 PRIVATE JUDGING.
23.1 Introduction
23.2 What Is A Private Judge?
23.3 What Factors Should Be Considered In The Decision To Go "Private"?
23.4 What Does A Private Judge Offer?
23.5 How The Process Is Different From The Public Courts.
23.6 Ethical Considerations.
23.7 Statutory Authority.
23.8 Preparation And Participation.
23.9 Conclusion.
23.10 Endnotes.
Part VII Income Tax.
Chapter 24 INCOME TAX: GENERAL RULES.
24.1 Introduction.
24.2 Child Support.
24.3 Filing Status.
24.4 Dependency Exemption.
24.5 Miscellaneous Issues.
24.6 Endnotes.
Chapter 25 TAX CONSEQUENCES OF PROPERTY DIVISION – IRC §1041.
25.1 Introduction.
25.2 Section 1041 Of The Internal Revenue Code.
25.3 Transfers Of Property Between Spouses Or Former Spouses Incident To A Divorce.
25.4 Tax Basis Of Assets Transferred Under Section 1041.
25.5 Conflicts With Section 1041.
25.6 Transfers Of Stock Options And Deferred Compensation In Divorce.
25.7 Stock Redemptions In Divorce.
25.8 Interest Paid And Received On Deferred Equitable Or Community Distribution Payments.
25.9 Preventing Unintended Outcomes.
25.10 Endnotes.
Chapter 26 TAX ISSUES OF CHILD AND SPOUSAL SUPPORT.
26.1 Support - General Discussion.
26.2 Definition Of Alimony.
26.3 Definition Of Child Support.
26.4 Key Cases—State And U.S. Tax Court (Key Cases Addressing Unallocated Alimony And Child Support).
26.5 Alimony Recapture.
26.6 Nunc Pro Tunc.
26.7 Payments To Third Parties.
26.8 Temporary Support Issues.
26.9 Conflict Between Family And Tax Law.
26.10 Support Arrearages.
26.11 What Agreements Must Say To Qualify As Alimony.
26.12 Non- Taxable And Non- Includable Alimony And Strategies.
26.13 Payments After Death.
26.14 Alimony And Expense Issues Of A Jointly Owned Home.
26.15 Child Contingency Issues And Traps.
26.16 Substitute Payments.
26.17 Reviewing Divorce Agreements.
26.18 Internal Revenue Ruling Publications This Section Can Be Placed At End Of Chapter.
26.19 Endnotes.
Part VIII Marital Investigations And Fraud.
Chapter 27 MARITAL FRAUD.
27.1 What's Love Got To Do With It?
27.2 The Value In Fraud.
27.3 Data Gathering.
27.4 Business Entity And Marital Fraud.
27.5 Common Frauds And How To Identify Them.
27.6 Divorce Planning Strategies To Affect Business Values And Income.
27.7 Conclusion.
27.8 Bibliography.
27.9 List Of Cases.
27.10 Sample Document Request.
27.11 Endnotes.
Chapter 28 SEARCHING PUBLIC INFORMATION.
28.1 Privacy Laws And Assets Searches – Introduction.
28.2 Asset Searches.
28.3 Hidden Assets.
28.4 Databases.
28.5 Search Engines, Meta-Search Engines, And Directories.
28.6 Alternatives In Searching.
28.7 Privacy Laws
28.8 Conclusion.
Chapter 29 BANKRUPTCY & INSOLVENCY IN DIVORCE.
29.1 Introduction.
29.2 Overview Of Chaper 7 Banruptcy.
29.3 Overview Of Chapter 13 Bankruptcy.
29.4 Protecting Domestic Support Obligations In Divorce.
29.5 Protecting Property Settlements In Divorce
29.6 Automatic Stay And Divorce Exceptions.
29.7 Priority Of Obligations.
29.8 Effect Of Bankruptcy Filing On Divorce Decree.
29.9 Certain Obligations.
29.10 Dismissal.
29.11 Revocation Of Discharge.
29.12 List Of Cases.
29.13 Endnotes.
GLOSSARY.
ABOUT THE EDITORS.
ABOUT THE CONTRIBUTORS.
INDEX.
About the Author :
Donald A. Glenn, CPA, CFE, ABV, CFF, CVA, is a nationally known lecturer to judges, attorneys, CPAs and other groups on Forensic Accounting and has authored hundreds of articles in the forensic area and on family law. He has over 30 years of experience in family law and is the co-author of the AICPA publication A CPA's Guide to Forensic Accounting for Divorce Engagements, 2005, and has authored several CPA courses covering family law and marital fraud. Glenn is a Partner with Glenn & Dawson LLP. He has served on the National Board of Directors of the Institute of Management Accountants (IMA) and has participated as faculty expert in the U. of California Hastings Law School trial advocacy program. He has served on numerous AICPA litigation and family law committees and is frequently appointed as Court's expert in family law matters. Thomas Burrage, CPA, is Principal in Charge of Litigation and Valuation, Burrage & Johnson, CPAs, PLC. He performs expert witness in cases fraud malpractice, minority shareholder, economic damages and family law. He is co-author of Wiley's Divorce and Domestic Relations Litigation, and AICPA's CPA's Guide to Family Law Services, and a contributing editor to PPC divorce taxation publications.
Donald J. DeGrazia, CPA, ABV, is senior shareholder in the firm, Gold Meltzer Plasky & Wise, specializing in federal and state taxation, multi-state taxation, and matrimonial taxation. He is also Chairman of Integra International, Inc. He provides various court and arbitration testimony, including matrimonial expert witness.
William B. Stewart, CPA/ABV, CVA, CFE, is principal of William B. Stewart CPA firm, specializing in forensic accounting. His expertise includes business valuations, family law, mediation consulting, and business advisory services. He has been appointed by the courts as an auditor, expert and receiver in large commercial litigation, and family law cases. He is a frequent speaker to legal and accounting organizations.
