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Accurate Financial Reporting in Family Law Cases: Why it is Crucial for a Fair Settlement


Divorces and Family law proceedings can be complex and emotionally charged.  Of course, everyone wants to know how their assets are going to be divided in a divorce, but in order to understand this, accurate financial disclosure is critical to reaching a fair and equitable outcome.  

Promoted by Justice Family Lawyers 4 minute read

Accountants and family lawyers often work together to ensure that client’s financial responsibilities are met, and by identifying situations where a party’s failure to disclose assets or income may result in an unfair outcome.  

Valuing Assets 

One of the main issues in family law proceedings is the valuing of assets and liabilities.   Often this is a contentious issue, and parties find it difficult to reach an agreement as to the correct or true value of an asset or liability.  

Often, it will be necessary for the parties to engage valuers to determine these issues for them.  For instance, if the parties are unable to agree on the correct value of their matrimonial home, then they will likely engage a property valuer.   

The same goes for valuing a business during divorce, investment portfolios and other valuable assets, and it is not uncommon for parties to consult Accountants to assist with this process.   Accountants can provide valuable expertise in determining the value of these assets using methods such as market analysis, income approaches and cost approaches.    

Tracing Funds 

In some family law cases, one party may attempt to hide assets or income, or to dispose of assets before or after separation to reduce the asset pool.   This will have a direct impact on the property pool and the assets that are available to be divided between the parties.  

Accountants can help to trace funds by reviewing financial statements and transaction records to identify discrepancies and unusual activity.   This process may reveal offshore accounts, assets held in the name of third parties, significant bank transfers or withdrawals, and fake expenses to reduce reported income.  

Using data analysis and forensic investigation techniques, Accountants can identify attempts at hiding or disposing of wealth.  For example, by reviewing financial documents, Accountants may identify discrepancies between the reported income on tax returns and the expenses that have been recorded.  Not only is this important to achieve a fair settlement, but it will also have a bearing on the amount of spousal or child support that is awarded.   


Where one party is found to have been disposing of, or hiding assets, these assets may be considered ‘add backs’, and can impact the division of the property pool. 

An Add back refers to an asset or income that has been reduced or squandered during the relationship, either intentionally or unintentionally.  This includes assets that have been transferred to third parties, used to purchase extravagant items, used to fund gambling or addictions, or simply assets that have otherwise been removed from the relationship.  

In some cases, Add backs may be added back into the overall value of the property pool, meaning that their value will be considered for division between the parties.  In other circumstances, the value of the add back may be deducted from the overall value of the property pool thereby reducing the value of the total asset pool available for division.  

The way that add backs are dealt with will depend on the circumstances of the case, including the length of the relationship and the contributions of the parties.  In general, the court views hiding or disposing of assets as a negative factor towards the contributions of the marriage and accordingly, the court may award a greater portion of the property pool to the other party to compensate for the hiding/disposal of assets.  

Accountants offer valuable financial expertise and forensic accounting techniques which can be used to reveal attempts to hide or dispose of assets.  Together, Family Lawyers and Accountants can achieve fair and equitable property settlements for their client’s. 

If you want to book in a free, short confidential chat about a particular matter, please get in touch by clicking here.

Author: Hayder Shkara is the principal of Justice Family Lawyers and Melbourne Family Lawyers. The family lawyers in his team have vast experience in family law, including financial and property settlement lawyers, divorce lawyers, child custody lawyerswills and estates, AVO lawyers, consent orders and binding financial agreements.

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