Transcript

Amber Alwais: If you have the estate that is in need of the forensic accountant, it’s a very wise use of your money. We are well trained in what we do and we certainly understand the principles. But when you’re dealing with that kind of estate, then you want to bring in another expert who is trained to track down, to be the money detective and and help you prepare your case.

Voiceover: You’re listening to the Texas Family Law Insiders podcast, your source for the latest news and trends in family law in the state of Texas. Now, here’s your host attorney Holly Draper.

Holly Draper: Today we’re excited to welcome Amber Liddell Alwais to the Texas Family Law Insiders podcast. Amber is a partner at the San Antonio office of Orsinger, Nelson, Downing and Anderson. She’s been practicing law for 25 years and has been board certified in family law since 2009. Prior to joining Orsinger, Amber worked as a staff attorney for Bexar County District Judges, which gave her the privilege of experiencing the law from both sides of the bench. In addition to her legal practice, Amber teaches family law, probate law and criminal law at the University of Texas at San Antonio. And she serves as the President of the San Antonio Family Lawyers Association. Thank you so much for joining us today.

Amber: Thank you for having me.

Holly: So why don’t you tell us a little bit about yourself?

Amber: Well, I think your introduction covers quite a bit. I’m board certified in family law. That’s all I practice with my firm of ONDA. I told my dad who was also a family law lawyer that I would never practice family law and look at me now. I’ve taught at UTSA for almost 20 years, that’s my other passion. I’m married. And I have one daughter who is the light of our lives, and three dogs and three fish that probably rounds out the Alwais family from this end.

Holly: So what you’re telling me is that even though my daughter tells me there’s no way in the world she’s going to take over my family business and become a lawyer, there’s still hope.

Amber: There’s still hope. You never know.

Holly: So how would you describe your current practice?

Amber: So currently, we went home at the beginning of the pandemic and I have not made it back to my office. I have practiced distance ever since the time the pandemic hit. I’ve made the switch. I love it. I do practice mainly in Bexar County. There are surrounding counties are starting to move back to live hearing. So I I tend to stay in the Bexar County Zoom. But all we do is family law. We do the heavier litigation, family law. And sometimes occasionally we’ll take an uncontested but very, very rarely. And that’s where we are is the heavy custodial litigation, the heavy property litigation. I am not personally an appellate lawyer, but we do have appeals that sometimes arise from some of our cases. And that’s not my forte, I turn those over to someone else in my firm.

Holly: All right, so today, we’re going to talk about a topic that a lot of lawyers, especially younger lawyers, might not know too much about. And that is working with a forensic accountant. So what exactly is a forensic accountant?

Amber: So a forensic accountant is a CPA who also specializes in tracing. I would phrase it as missing money or tracing separate property claims. When you get into the higher echelon property cases, you have to pay that forensic accountant, that you need someone to help you make those claims. They’re kind of like a detective for money is the way I would phrase it. detective for money, and they’re there to help you.

Holly: So obviously, if we have a low networth case, we’re not going to be looking at hiring a forensic accountant. Is there a certain threshold over which you think it’s worth it?

Amber: So it depends. And yes, what I would say is, the forensic accountants that we work with have their minimum retainer of $7,500. That’s just to get started. So if you’re not looking at a property claim that’s worth I would say, at least $75,000, I’m not sure that I would invest in a forensic accountant. It’s something to think about. And what, by value I mean, not just actual dollars, I mean value of your separate property claim or value of some other claim the forensic accountant may help you to bring. You just have to balance, the expense and the time of the forensic accountants who’s going to charge for their time, they may be deposed. If there’s a forensic accountant on the other side, they may need to show up at that deposition, be it mediation, and certainly a trial and all of those expenses add up. So you want to think about is it worth bringing in the forensic accountant in this case?

Holly: So how does a forensic accountant differ than dealing with your typical CPA?

Amber: So the forensic accountant has more training and they are there, the typical CPA just helps you with the IRS. The forensic accountant in the family law arena comes in and is usually generally very well versed in family law and can speak our language. And they know about the claims that we’re going to ask them to assist us to bring. For example, the reimbursement claim, or the waste claim, or the reconstitution claim. Or the other big one is, obviously there’s also fraud on the community, but the big other one is proving separate property by that standard of clear and convincing evidence, if you’re trying to trace money from, for example, inheritance into some piece of real estate.

Or into some other item that was purchased or transferred into another account. They’re going to help you trace that money and meet our burden to prove a clear and convincing evidence that it is still in separate property. I did attend a CLE, once, when I was a much, much younger lawyer, with a very good lawyer by the name of Bith Pennypacker, who is no longer with us, who said that you could do it with your with your own notebook and pencil. And he could. I would never attempt that. If you’re at the point where you need a forensic accountant, you should go and get the forensic accountant.

Holly: Absolutely. And I think, you know, if the client has sufficient assets to justify hiring a forensic accountant, their money is better spent on the forensic accountant figuring out those specific issues than paying our hourly rate for us to try to figure them out. When that’s not our expertise.

Amber: I could not agree more. If you have the estate that is in need of the forensic accountant, it’s a very wise use of your money. We are well trained in what we do. And we certainly understand the principles. But when you’re dealing with that kind of estate, then you want to bring in another expert who is trained to track down, to be the money detective and and help you prepare your case.

Holly: So I’d like to kind of go through the different types of cases where a forensic accountant might be helpful. And you know what to look for, on our end, to know that we might need to hire a forensic accountant, and then what their role is in that particular type of claim. So I think the most common one, at least that I see in my practice would be relating to tracing of separate property. Can you talk a little bit about what that is when we might want to hire a forensic accountant and what they would do in that situation?

Amber: Sure. So tracing is in non legalese, when you take separate money, and you mix it with community money, and now you’re not sure which dollar is which, because you’ve put it all into one account, or you moved money in and out. And now you’re trying to go back and prove to the court that at least some of that money was your sole and separate property. And when that would happen, a good example of when that happens is non jaded family law lawyers like me, when they inherit money, they turn to their spouse and say, look what we got, and they put it into a joint account, or a joint savings account. They put both of their names on it, and then they start spending money. They don’t put it into a separate account, because they haven’t listened to their jaded family law lawyer.

So they don’t put it in a separate account and go to the bank and tell the bank suite the interest. Because as you and I know, Holly, the interest is separate, it’s community property. But the principle is separate property. So they’re rocking along, they’re spending all this money. Perhaps they’ve gone on a trip to Hawaii, which, or perhaps they bought something, and then this not inheriting spouse, or the inheriting spouse says this marriage is no longer working. Let’s get a divorce. And the inheriting spouse says all of that’s mine. And the non inheriting spouse says my name is on the account, and my name is on this. At that point, you don’t know which dollar is which.

And you’re going to have to hire a forensic accountant to apply one of the many tracing principles. So if you’re talking about a million dollars, absolutely, if you’re talking about $300,000, absolutely. It’s worth the investment of the forensic accountant to come in. Get all your bank records together. Now they’re all in line, and turn them over and let the forensic accountant try and trace those funds. They’re not physically going to say, gee, Judge, this dollar is separate. And this dollar is community. But there are principles that they’re going to apply to say, at least this much of the account is separate property. And here’s how I got through it, either the clearing house method, or the community out first rule, or identical or similar, some method. They’re going to apply one of those and part of your role as an attorney is to get with that a forensic accountant and figure out which one of those do you want to do.

There’s that line item tracing, where they actually go line by line through the bank accounts. And if you’re talking about significant time period, five years, 10 years, 15 years, that line item tracing is going to be incredibly expensive for your client. Because literally the CPA has to go line by line. So if you don’t need that line item tracing, you want to discuss one of the other principles, and maybe they can do it a little less expense. But that is what most CPAs do is that tracing, and you need to talk to them about which theory are we going to apply which one is most beneficial to our case. And it’s still saying at the same time still cost effective. Sometimes you have to do that line item tracing, so get your checkbook out. And make sure that that claim to the line item tracing that you’re chasing enough money to make it worth it.

Holly: So when, I know one of the big issues we have when we deal with clients, especially when it’s been a long time that this since the separate property came in or maybe we’re looking at money from before the marriage or something of that nature. Oftentimes our clients don’t have all the documentation that we would like for them to have to be able to prove these claims. Does a forensic accountant take those extra steps of trying to locate information, dig with entities to get statements or are they relying 100% on what our client is going to give them?

Amber: So in my experience, that depends on the forensic accountant you work with. I mean, as lawyers, of course, we have the ability to issue discovery and subpoenas and send things out, say you have these missing records to fill in the blanks. Sometimes, if you’re really, really lucky, which doesn’t generally happen. You could call the other side and say, I’m missing x, do you, can you sign a release to give those to me? That’s generally not going to happen when you’re trying to prove a significant separate property claim. But you do have that discovery, you have the subpoena power.

The people that I work with, with the forensic accountants I work with, we’ve worked together long enough that I pretty much know what they’re looking for. And we try to get our clients to bring in documents. And then the forensic accountant comes back and says, Amber, here’s where your holes are, let’s see what we can go get to figure this out. And if you can’t get the documents to figure out the holes, then your strategy kind of changes. Maybe now you have to try a different application of rules. Or you get that report and do the best that you can and see what you where you can get.

But generally, the lawyer in my response, in my experience is responsible to go get the documents, but the forensic accountant is going to tell you. These are the documents we’re missing. Amber can you work with your client? Can you send out the discovery? And sometimes clients have it, if you just sit them down and talk to them and tell them, this is specifically what we’re looking for. In one case, we were shocked when we got six banker’s boxes full of records. And there it all was. We couldn’t get to it because it had been more than seven years.

And as you know, a financial institution is only required to keep those records for seven years. So after seven years, you got a problem. Well, this particular client had kept every single record. And once we explained to them, specifically what we were looking for, in came the banker’s boxes. That was a good day. That was a day that really made my side of the pancake, very happy because we knew we had all the records we needed. But generally, you’re on your own to get those.

Holly: The day when you’re glad that you have a hoarder for a client. So another way that attorneys will use forensic accountants is if they’re trying to search for hidden assets. What can a forensic accountant offer in that regard that you and I as attorneys really couldn’t.

Amber: So sometimes, what is a little more cost effective that if they go through those bank records line by line, sometimes they’ll find money transferred out to another bank account, that you have not, you know, gone through the bank records line by line, because you’re paying a forensic accountant to do that. And they can lead you in the direction of where those funds are. Sometimes people park funds with the Internal Revenue Service. They may find that on your income tax return. Sometimes the forensic accountant will find funds out to other entities or other people that you can go track down. And every once in a while you get lucky and you may find funds to a title company.

And then you can subpoena the title company and say I want to know what was done with regard to this party in this time area. Send me all the documents. Sometimes you’ll find in those entities, you’ll find they’re hiding assets in those entities. Those are things that I have found that forensic accountants, they’re very detail oriented, not that lawyers aren’t, but CPAs by nature are detail oriented. And so they’re going to ferrett through there. And they may find things you would not be able to initiate on your own. And so they’re another excellent source for that.

Holly: One of the things you mentioned when you’re kind of rattling off a list of ways that you use forensic accountants was reconstitution. Tell us a little bit, what that is, and how I forensic accountant can help.

Amber: So that’s a that’s a fun one, in my opinion, because what happens is, even when we warn our clients, you know, look, money disappeared with a few clicks of a computer, please let us take the steps to protect you. Inevitably, you have that client who says, oh, no, my spouse would never do that. And then a few weeks in you discover a million dollars has suddenly gone missing. You’ve sent all the discovery, you can’t find it but you know it that it existed. And so that reconstitution claim basically says, judge, we know the money was there, we can prove the money was there, but we can’t find it. We don’t know where it went. I’m gonna put the man on the spot on this one on the next one. I’ll put the woman on the spot.

But judge where he took it, we don’t know where it is. And we want you to take that million dollars that we know existed and we want, we can prove in the records he withdrew it. We want you to take that and put that phantom million dollars on his side of the ledger, so that now we wife or other husband as the case may be, are owed an asset of a million dollars to get to our fair and just division to start with. And then of course, you’re going to ask for more because the husband was a bad actor, and you want to punish him for that. So that’s in essence, what you’re doing is you’re saying, I want you to tag the other side with the asset that we knew existed but can’t find. Don’t just say, well, it’s gone. We can’t divide it.

No, they’ve got it. We all know they’ve got it. Or perhaps it’s in another country where you can’t get to it. Which is common in South Texas, that you run into marriages where there are lots of assets in Mexico, we can’t touch those. And you know, they’re under the other spouse’s name. So you just say, judge, I know that money is there, I can’t do anything about it. Could you please just put it on his side of the ledger? And then give me everything else that we can access to get me to the fair and just division? I think it’s a very creative method. And I don’t see it all that often. I think people should, lawyers should use it more often and say it’s gone. We know it’s gone, we can prove you had it. Now we’re going to tag it to you, and we get the rest.

Holly: How far back in time do you reasonably think you can look back for a claim like that?

Amber: I am not personally aware of any kind of a deadline. I think it depends on what kind of records you have. Right? I think the closer in time to the filing of the dissolution, the more likely it is, the court is to go with you and say, hmm, that just doesn’t sound right to me. I think the farther you get back in time, the less likely a judge is going to be able to, will be willing or a jury will be willing to reconstitute the estate for you. I think it’s fact intensive. But like I said, it’s in the last year, a couple of years before the filing for divorce, I think you’re in really good shape. If you get back beyond that, I think you’re gonna have a little more challenging time getting a court to find reconstitution at that stage. That’s my personal opinion.

Holly: And I think it probably also depends on when the innocent spouse got knowledge of that. So you know, the wife in your scenario, if she really is completely in the dark on the finances, she may not know till the forensic accountant tells her that this million dollars went missing, however long go.

Amber: So that’s a real common scenario. And in our case, we’ve already identified the wife that is the non nominal person, but people come in, and only one spouse has knowledge of what their assets are, what their liabilities are, what their debts are. In that scenario, you know, one spouse, no disrespect, their just purchasing stuff at will, they don’t work on a budget. And then your client comes in, they don’t know anything. They knew that they threw down their credit card, and now this, their husband has filed for divorce, and their credit card is not working. And you’re starting from below ground zero to find out what that information is. But I I agree with you.

If you if you are not an innocent spouse, or if you knew and you waited 10 years to do something about it, I don’t think a judge is going to have a whole lot of sympathy for you. However, if you get into the divorce proceeding, and you suddenly discover that the you know, husband’s entity has been paying his soncha, you know, to go to Hawaii and go to Aruba and do all these other things. And you discovered at that time that all of these things are suddenly gone missing, I think the judge will have a lot more, you a lot more responsive to your requests. If you can show as soon as I found out, I did something about it. If you sit on your hands, not gonna have as much weight with the factfinder in my opinion.

Holly: Another area that a forensic accountant may be helpful in family law cases relates to fraud or wasting of community assets. Can you tell us a little bit about that?

Amber: Sure. So let’s start with the wasting of community assets. And we’ll go the other way. This time, we’ll blame the woman this time. So she’s the doctor and she took off with her she’s having an extramarital relationship with her new scrub nurse. And the husband is, the typical thing that we find in our office is someone comes in and they say, you know, all of a sudden my spouse asked for a divorce. I don’t know what’s wrong. And after a number of years of practicing as I have, you know what’s going on pretty much before they do. So you gingerly start investigating whether or not there may be a significant other. Sometimes your potential client will say oh, no, they would never do that.

And then a couple of weeks, and they realize in fact, there was a significant other. You get the bank records in and you say, when was it that you went to Spain for two weeks? They don’t know what you’re talking about. Did you stay at this fancy hotel? Did you did you enjoy this play? And the spouse is, you know, husband’s like, well, my wife was on a business trip. Well, I’m not sure she was on a business trip after all. So you start, have your forensic accountant go in and sometimes with the assistance of your client, you can identify, you know, yes, I did go to this golf tournament or yes, I was on this trip, but not on that one.

So identify funds that were spent on someone outside of the community, outside of your natural bounty. So a girlfriend, a boyfriend, and sometimes even to your step kids, and sometimes when things get really nasty in a divorce assets suddenly start to get transferred to siblings, right? Or the children that are not in the marriage. And that is a fraud on the community when you start giving things away to people outside of the community, that’s what we call fraud on the community.

And your accountant, your forensic accountant, can help you identify those things as well. There are, you know the wage claim, the most common one is, I used the money on a sancho or a sancha. The fraud claim generally is you took something out of the community and tried to give it to someone else to stop the community from having it. That’s a very basic statement. There’s actually a standard in the law that you need to go investigate. So you can prove all the requirements. But that’s the basic understanding what fraud of the community is.

And forensic accountants are excellent at helping you set the stage for how it got from point A to point B, or how much money you got spent on a significant other outside of the community. Those are, you know, my interesting question would be if you’re in a polyamorous relationship, a consensual polyamorous relationship, is it still waste if you knew about the other significant other because you’re in the relationship with them, too? Is there still a waste claim there? That’s not one I’ve gotten to litigate yet. But could be interesting to hear what would happen in that situation.

Holly: Yeah, I would certainly think your claim is a lot weaker, if you’re monitarily in that type of a relationship. Another avenue that a forensic accountant might be especially helpful is when we are dealing with business valuations.

Amber: Yes.

Holly: So tell us a little bit about business valuations, when you want to bring in that expert, and what we’re looking for there.

Amber: So business valuations can be very expensive as well. You want to make sure again, that the entity that you’re trying to value has significant enough financial effect, impact that is worth investing in the business valuation. And so what happens, of course, is people have entities. They have businesses, and we’re not, you know, like a McDonald’s, right, you could own a McDonald’s. And that would be something of value. But more often than not people have entities if they have begun. A construction company, a consulting company, some kind of entity where they’re running the day to day operations, and you want to know what it’s worth. Well, the person who owns the entity is going to tell you, it’s worth nothing.

And the spouse who’s not an owner of the entity, like it’s worth, how many zeros can I get in before the decimal point. So you’re hiring that forensic accountant to try and give you an objective opinion of the value of the entity. And the things that a forensic accountant will consider when conducting that evaluation are something called professional goodwill versus personal goodwill. So it’s a very important distinction, because professional goodwill, like the McDonald’s. McDonald’s, everybody recognizes, it’s commercial goodwill. You know what a McDonald’s is. The fact that you own a McDonald’s comes with an intrinsic value already. But if you’re trying to value, for example, a solo law practice, where there’s only the one lawyer, personal goodwill, which is what your personal value brings to the entity is not divisible.

And so whether it’s corporate goodwill, or personal goodwill makes a huge difference in the value of the entity. And again, there are multiple ways to value a business entity. You can do a book value, you can, it’s escaping me the other values at this time. But one of the other things that you want to look at is, is there a minority discount? In other words, and does your spouse own 100%. Do they own 90%, do they own 30%. Because if they have a minority interest, you have to discount again. And forensic accountants actually have tools available to them to go out and say this type of business is with is generally worth X, right.

And they may interview your employees, they may interview your vendors to try and figure out what is the value of the business that you’re, that you’re looking at. It is a wonderful tool if you can afford it. And sometimes courts will say we’re going to appoint a business valuator for the proceeding. I’m not a fan of that. I want my own hired gun, right? I want somewhere, somebody who’s on my side to tell me what it’s worth. And when you’re talking about the business valuation that and I don’t know, that exactly relates. But there’s also that Jensen claim where you can bring that claim that says, you know, look, you’re the CEO of a 300 person corporation and you’re paying yourself $50,000 a year. That isn’t right. That’s, you aren’t compensating yourself at a high enough value.

So now we want to bring that claim too. So that business valuation can be incredibly important. And sometimes there are documents like in a physician’s practice. A lot of times when you sign into the physician’s practice, they tell you, this is the value that we give the entity. You’re not necessarily stuck with that, that’s the other reason you want to get the business valuation. And a lot of times they’ll tell you if you get a divorce, if you’re going through a divorce, the value is X. But there are other things to look at. What, sometimes those entities have their own internal valuations. And you can subpoena those. You can request those. You want to look at the value of the real estate holdings that they have. The value of their accounts receivable, all of those things. It’s not just the buy sell agreement that they bring in, say, well, we are telling you this is what it’s worth. Not necessarily.

You need to get that forensic accountant to dig in and find out what else is there? What other claims exist, what other pieces to the puzzle are there that need to be valued to come up with a final business valuation? And when you get that business valuation, one of the things you want to keep in mind is whether or not your client who is not a part of the entity, do you want them? Can they even hold part of that entity after the divorce? And do you want them to? Usually you can’t, right. If they’re a professional practice, it’s written to where the non participating spouse cannot own a part of the entity. But even if you could, would you want your client who’s divorcing their spouse to continue to have to have day to day operations with that person? No, absolutely not. So that’s something else you want to consider when you’re getting this business valuation, is which is how much is it worth? And what are all the pieces.

I don’t want my client to continue to have to work with this person. And how do I secure the payout for my value of the portion of the entity that is community. And that’s something else that forensic accountant can help you with. They can help you identify other assets that you can attach to protect your judgment, so that you can make sure you can collect on it. So you have some like a house or real estate or something else so that if the spouse owning the entity fails to make payments, you’ve secured your judgment with some other assets that you could go collect upon. Because believe it or not, when people get divorced, they don’t always do what it says in the divorce decree. You may have to go back and continue to have the fight to get the assets that your client was awarded.

Holly: So you mentioned that you typically want to have your own business valuation expert for you know, your hired gun that’s going to be on your side. Is there ever a time where you, you said, hey, opposing counsel, nobody has any clue what this business is worth. Let’s go in together and do a business valuation so we come up with a dollar amount.

Amber: I have done that. And one particular case where it was a cell tower business. And it was just incredibly difficult to find any information to value the cell tower business. And in that instance, everybody agreed we were going to get together and find one person that we were going to all work together with to come up with a value. And so it can’t be done. Or if you’re if you think that there’s some money there, but not significant funds and say, maybe the wiser choice is to just retain the one business valuation CPA and say, tell us what the number is right? And then use that as a yardstick. If you’ve got some value, but not enough that you’re going to hire two forensic accountants and go have the fight, that is something to consider.

Holly: If you start going that route, where both sides have agreed we’re going to have expert, you know, Mr. Smith is going to be our business valuation expert, and everybody’s going to pay half the fees, and it comes back and it is not good for your client. Do you then look into hiring your own hired gun?

Amber: I would because you want to be able to. Even though you’ve agreed to that person, it doesn’t mean that there aren’t questionable assumptions, questionable actions, not questionable, but in the sense that you could ask questions like, why didn’t you do it this way? Or did you consider that? Or why didn’t you apply this method, if you don’t like it. It’s a challenge, though, when you have a court appointed person, and then you bring in a hired gun, it’s very clear that you just don’t like the outcome. Which probably means the other side does like the outcome.

So you have to be very cautious in that respect that you’ve got this court appointed expert, and now you’re pulling out additional funds to try and attack the report that you’ve agreed to. But sometimes you have no other option. It really comes out bad, you need to create some way for the factfinder to see there’s another opinion here. And at least give your clients the opportunity to have that ammunition to go in and say judge, I know the court appointed this person. But here is another point of view another opinion we’d like you to consider and maybe the court will heal you. Hear you excuse me.

Holly: One other way, or one other common issue we have is relating almost to child support. Where we have a self employed person, someone who owns their own business, somebody who does not have a typical w-2 job. And we know these people are living large. There’s obviously money coming in. But when it comes time to put down income on paper, it can be difficult. Is there a way that a forensic accountant can help in that process?

Amber: Yes, I think they can. Again, they can go through bank records and credit card records and say well, if their income, their expenses, their lifestyle is X and here are all these other things that they have that we’ve located. Other entities that may be producing income. Or this is, you know, in their income tax return. This is, this is how we can explain. They took all of these deductions which are not, they’re acceptable for the IRS, but they’re not really reflective of their income. So a forensic accountant can assist you in that way. If you’re not super well versed in and I’m in an income tax return, they can help you find places where you can poke, pull apart their income.

They can look through the records and say, you know, this is this is actually income. This is actually income. How are they living life at this level? Insert all the records that we have in telling you they only make X. Which I had found to be extremely effective. If you say I make $60,000 a year, but your mortgage payments are $100,000 a year, you know, it’s helpful to the court to say, well, wait a minute, something doesn’t add up here. There’s no way that you make $60,000 a year, you’re living in a you know, million dollar mansion and driving a $350,000 car. And you just came back from two weeks at the Waldorf Astoria. Forensic accountants can help you find that information and bring it to the attention of the court. And the court is most likely to say something doesn’t add up here. Let’s figure out what it is.

Holly: And in that situation, I mean, if you’re looking solely at child support, there’s definitely a weighing option of is it worth the cost? Because is your court likely to go above guideline? Probably not, but you never know. But if you have spousal maintenance, or there may be other reasons why factoring that income into your equation is important.

Amber: I agree. I know our courts in Bexar County do not tend to go over the guidelines. But if you can prove a significant wage earner, I think courts are going to be more responsive to your request to consider to go over the guidelines. If you can not only show that it’s significant company, but you can meet that proven needs of the child, I think the courts will consider it. But again, as you pointed out, the forensic accountant is expensive, they don’t work for free. So you have to make sure that you are know that the money that you’re investing is going to come back to you in value in child support, or spousal support for that matter.

Holly: So we get a new case, there’s a decent amount of assets, what are some red flags that attorneys should be looking for in the financials that might signal a need to bring in a forensic accountant?

Amber: In my estimation, it’s if you see lots of money coming in, but you it’s transferring somewhere else, you can’t find it, you can’t see it in the accounts, or that lifestyle issue. If you can’t, if they’re living at one level, but their income indicates another level. If your client is telling you, well, I inherited all this money, and these things are all mine. But there’s, the other side is pushing back, that would be a sign. What I have found is that lots of people don’t understand lots of lay people don’t understand separate property. When we were in court recently, in a lengthy hearing, the other side said, yes, she inherited the money, but she put it into a joint account. And so now it’s community, which is not an accurate statement of the law.

And in my opinion, mine, it was an admission by party opponent that it was her sole and separate money because you admitted she inherited it under oath. But those kinds of things where people come in, and they’re like, I they inherited money, or we bought this or that is mine. Those are the things when you need to start saying I need to get a forensic accountant. Or if they say, you know, he owns this business, but it’s really just, you know, it’s just him. And he employs his friends. Things like that. Or if there’s multiple entities or multiple rental houses, those are signs that I would say you need to start thinking about bringing in a forensic accountant. But the most common one for me is we inherited funds.

And now we need to figure out what happened to them followed by the, he has a construction company, but I don’t really know anything about it. That phrase, I don’t really know they paid all the bills is always a little bit concerning when they come in and they really don’t know. And that case, you need to start considering a forensic accountant. So we’re gonna have to get somebody in here to help us start peeling back the layers of the onion, tracing everything out and figuring out what, where, and what belongs to whom. Things like that. Lengthy marriages, a lot of times second marriages. If you have a premarital agreement, those are things that probably would you start thinking out, we need a forensic accountant here.

Holly: So for those attorneys who don’t already have a, you know, contacts with forensic accountants, and they’re starting out fresh, what should they be looking for when considering a forensic accountant to hire?

Amber: So my opinion is always go to a lawyer that you know and trust from recommendations right. Look within your own legal community, they’re going to tell you who they work with who they like, who they think is worth their salt. I wouldn’t just go out on a limb and pick somebody out of the blue. If you don’t know someone, get them on social media. Call off your punch list to say what do you know about this person? Have you ever worked with this forensic accountant? And for God’s sakes, if you are a new lawyer and you hit the, you know, $3 million case, bring in another lawyer to help you and have that person guide you to a forensic accountant that they worked with who knows what they’re doing. You’re going to spend lots of time with the forensic accountant. Y’all need to make sure that you’re on the same page that you work well together.

You need to be clear about what your responsibilities are going to be and what the responsibilities of the forensic accountant are. You have to be clear on that division. And remember, in the end, no matter what happens, you’re the lawyer, you’re responsible for what happens in the case. So you have to trust the forensic accountant with whom you’re working. After you’ve been at it a while you’ll establish a good rhythm and you’ll you’ll be able to work with your person or persons of choice without much trouble. But that first one, you really need to reach out. It’s kind of like interviewing your physician for the first time or when you’re looking for a lawyer, shop around, find one that you think fits. Find somebody that you that you trust whose worked with forensic accountants. Get their recommendations, don’t just go with the first one out of the blue.

Holly: I know that forensic accountants are also often used in criminal investigations. Is there a difference in the type of forensic accountant we’d want to hire for a family law case as compared to the type of forensic accountant that would investigate something criminal?

Amber: So I don’t ever do criminal law. So as soon as you say the word criminal law, I’m a little bit out of my area of comfort. But you want to look for a forensic accountant who specifically focuses on family law issues. Those familiar with family law, because our burdens are different. In family law to prove that sole and separate property, you have to hit that hit that clear and convincing standard. As you know in criminal, it’s beyond a reasonable doubt. And they’re looking for crimes. You’re looking for civil information. So I would caution that the civil accountant is just looking for money between families or entities, the criminal person is looking for someone who’s actually violated a portion of the penal code, they’ve got a much higher standard.

And the challenge is, you know, if someone’s committed a crime, they’re going to prison if they’re convicted, they’re not gonna like the forensic accountant a whole lot. And the family law arena, it’s a division of money and assets. I don’t think that the stakes are high. Of course, the stakes are high because of the claims of separate property and tracing and such like, but you’re not gonna go to prison. So the forensic accountant needs to be somebody who is looking to prove that clear and convincing standard for separate property, and is familiar with family law terms and roles. Criminal forensic accountant is going to be working mainly off the penal code.

Holly: What types of information should attorneys be collecting from their clients to give to their forensic accountant?

Amber: So depending on what you want to prove, but bank records, credit card records, entity records, such as bylaws, organizational documents. If you are in a partnership of some sort, or professional organization that buy sell agreements. Things of that nature that you’re that you’re looking for, would be where I would tell my client to start. If you’re bringing claim a separate thing, it’s inherited, get the estate documents. Get the will or get the estate planning documents. If there if there was no will then get the documents from the court proceeding for the estate proceeding. Have those ready. Get your titles ready for your homes. Do some research on your appraisal district, right.

Go down to the county courthouse and pull deed records that say, this is when the house was bought. And if you’re lucky, and you’re trying to prove the separate property claim, it was either bought before marriage, or it says purchased by such and such a sole and single person. So those are the things that we would send our clients after and say, go ahead and get those ready, because you’re going to save time and money if you gather them yourself. If they don’t want to, and they can afford to pay someone else to do it, that’s fine. But that’s still the list of documents that we tell our clients this is what you need to start gathering. These are the things we know the forensic accountant is going to need.

Holly: So we’re just about out of time. But one of the things I like to ask everyone who comes on the podcast is this. If you could give one piece of advice to young family lawyers, what would it be?

Amber: Well, my advice would be and you’ve probably heard this before, it takes a lifetime to earn a reputation and only a moment to lose it. So practice, always at the epitome of your morals and ethics. Remember that in a close call between you and another lawyer, your reputation speaks volumes. And you never want to tarnish it for anyone, including the client. And I had a client ask me once here recently, the other lawyer represented that he had COVID and could not go forward. I advised my client, and my client told me I want him to show up at court and prove a hospital bill and I said I’m not going to do that. If another lawyer tells me that he has COVID that is enough for me.

If you want to show up at the courthouse and ask the judge to have that lawyer provide proof, you do that and I’ll meet you there with my motion to withdraw. And the client said are you telling me your reputation is more important in my case? And without missing a heartbeat, I said yes, it is. Because it only takes a moment to lose that reputation. It takes forever to build it, you need to hang on to it and remember your colleagues are part of the practice. You’re going to see them again, you’re going to see that judge again. And hopefully the way that you treat opposing counsel will be the way that they treat you and you want to always take the high road in that regard.

Holly: That is excellent advice. I agree completely. So where can our listeners go if they want to learn more about you?

Amber: So they can go to www.onda, which is o n d a familylaw.com Or they can go to orsingerlaw.com and find information about me there. Either place.

Holly: Perfect. Well, thank you so much for joining us today. For our listeners, if you enjoyed our podcast please take a minute to leave us a review and subscribe so you can enjoy future episodes.

Voiceover: The Texas Family Law Insiders podcast is sponsored by the Draper Law Firm. We help people navigate divorce and child custody cases and handle family law appellate matters. For more information, visit our website at draperfirm.com.