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Each party to a family law matter has an obligation to make
full and frank disclosure of all information relevant to the case,
in a timely manner.
Rule 13.01 of the Family Court Rules 2004 (Cth) states
the duty of disclosure is ongoing from the time that the parties
begin conferring in regard to, a potential property settlement
(even if they have not commenced proceedings in the Family Court)
until the matter their property proceedings are finalised.
As family lawyers, we frequently engage forensic accountants to
not only unravel complex business structures but to assist with
determining the extent of the asset pool, valuing interests of a
party in various entities and providing advice as to structuring a
settlement.
How can a Forensic Accountant assist their client with
their disclosure obligations?
Accountants have an important role to play in assisting family
lawyers in family law proceedings.
Accountants can assist Family Lawyers in presenting
clients' information clearly by:
creating a consolidated schedule of assets and
liabilities;
creating mind maps of entities;
explaining complicated financial transactions; and
clarifying complicated transactions.
'Red Flags'
The following examples act as 'warning signs' that a
party to proceedings may be hiding or undervaluing specific
assets:
Failure to disclose assets or resources held offshore –
for example, in off-shore tax havens in blind trusts;
Purchasing assets in the name of other parties;
Sale or transfer of an asset at a lesser value to a friend
– this may be done by a party to hold the asset until the
family law matters is finalised in attempts to keep it out of reach
of their former partner;
Assets being undervalued;
Undervaluing goodwill of a business;
Concealing acquisition or disposal of assets
post-separation;
Excluding the work in progress in a partnership/business which
has an impact on the businesses profit and asset value;
Failing to disclose details in relation to contracts acquired
which are yet to be performed;
Prepaying tax;
Faking a robbery; and/or
Diverting funds – for example, a testator may choose to
protect a party's inheritance from potential divorce
proceedings by leaving a party's inheritance to their
sibling.
Locating hidden assets: Where to look?
If a client suspects that their former partner has not made
full and frank disclosure, they can utilise one or more of the
following contrivances to assist with their inquiries:
searching Landgate or ASIC registers;
making an application in the Family Court seeking interim
orders that specific documents are produced;
issuing a subpoena for the production of documents; and
be careful, as a forensic accountant, your file is generally
not subject to LPP so the entire file can be subpoenaed.
seeking an Anton Pillar order from the Court for
ex-parte seizure of property.
Clients can also utilise the services of a forensic accountant
to assist them with their inquiries.
Additionally, it is imperative to marry up signed Form 13
Financial Statement to information available from other sources
such as:
tax returns;
bank statements;
balance sheets;
depreciation schedules;
financial statements or loan applications;
credit card statements;
passports; and
BAS statements.
Examining Family Court files for previous separations parties
have undergone can also assist with revealing assets available to a
party.
We find that forensic accountants' knowledge and experience
in analysing financial documents, auditing techniques and their
awareness of common methods of secreting property, is extremely
useful in uncovering hidden assets. Through close co-operation
between lawyer and accountant, it is possible to discover these
undisclosed assets.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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To finalise your separation with your husband or wife, you generally need to consider more than just obtaining a divorce.
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