Introduction

Step into the intriguing world of divorce forensics, where numbers tell tales of passion, peculiarities, and unexpected surprises. Beyond the legal battles and emotional turmoil, lies a realm where financial records reveal more than just dollars and cents.  Join me on a journey through the lighter side of divorce investigations, where hidden passions, quirky spending habits, and secret admirations come to light, offering a glimpse into the human comedy amidst the chaos of separation.

 

Hidden Passions

Imagine discovering that one spouse has been secretly funding a hobby or passion project for years without the other spouse’s knowledge.  For instance, a seemingly conservative accountant might be revealed to have spent thousands on a collection of vintage cars, model trains, or even a hidden art studio.  The monetary impact could be substantial, with significant sums diverted from joint finances to fuel this secret passion.  Uncovering such expenditures might lead to amusing reactions from both parties, with one surprised by the revelation and the other perhaps feeling a mix of embarrassment and pride.

 

Quirky Spending Habits

Forensic accountants might stumble upon unusual spending habits that shed light on the dynamics of the relationship.  For example, discovering regular purchases of extravagant hats or rare books might seem frivolous at first glance, but they could signify deeper aspects of personality or relationships.  Perhaps one spouse has a penchant for eccentric fashion accessories or obscure literary works, which might have been sources of contention in the marriage.  Assigning a monetary value to these habits could be eye-opening, revealing the extent to which such expenses have impacted joint finances over time.

 

Secret Admirations

Financial investigations during divorce proceedings might also uncover surprising evidence of secret admirations or indulgences.  For instance, large expenditures on luxury gifts, expensive dinners, or exotic vacations could hint at extramarital affairs or hidden infatuations.  Such discoveries could provoke a mix of emotions, from shock and betrayal to amusement or even relief.  Assigning a monetary value to these hidden indulgences can provide concrete evidence of their impact on the marital estate, potentially influencing the division of assets and spousal support arrangements.

In each of these scenarios, the financial implications can be significant, with expenditures impacting the overall distribution of assets and financial obligations post-divorce.  However, the revelation of these hidden passions, quirky spending habits, and secret admirations can inject a touch of humor and humanity into an otherwise serious process.  It reminds us that behind the numbers and legal proceedings are real people with complex personalities, desires, and relationships.  As a forensic expert, navigating these nuances requires both diligence and sensitivity, recognizing the importance of financial transparency while also acknowledging the human elements at play.

 

Using Common Language

I worked on a business divorce that had several male and one female partner.   There was some discourse within the company and the consensus was to just sell the company.  There was a prospective buyer that was interested in acquiring the company but the seller wanted to know what the value of the company was.  We had started the valuation process and noticed a large increase in the entertainment expense account.  I reviewed the entertainment expenses the general ledger and noticed the word “Stelledo”.  I performed word search for ”stelledo” and found multiple hits on the word and the related amounts paid to “stelledo”’s.  “Stelledo’s was actually a gentleman’s strip club.

In one year alone there was in excess of $30,000 spend in this club.  This was an interesting finding in that the expenses were eliminated for valuation purposes.  However, the female owner was extremely mad about the expenditures.  From my understanding after discussing this with the attorney, on a scale of 1 to 10, her rage was about 10,000.

 

Conclusion

When navigating finances in divorce, consider the topics discussed above.  Lessons learned from these humorous negotiation anecdotes may be helpful.  If you or someone you know is going through a divorce, remember that while it can be challenging, finding common ground and fair resolutions is essential. Seek the guidance of legal professionals and mediators who can help you navigate this complex process with empathy and fairness.

I have earned a Master’s Degree in Business Valuations and apply those skills to my everyday business valuations.

Richard Claywell has been valuing closely held companies since 1985.  He has earned two of the highest designations in the business valuation field, the Certified Business Appraiser (“CBA”) and Accredited Senior Appraiser (“ASA”). Richard is a Certified Public Accountant, has a Master’s in Business Valuation (MBV), and holds ASA, CBA, ABV, ICVS, CVA, MAFF, CFD, ABAR, CVGA, and ICVS-A credentials.

I hold the Master Analyst in Financial Forensics and the Certified in Fraud Deterrence.  I have taught forensic accounting/fraud courses in the United States, China, and Taiwan.

I welcome and encourage comments and feedback. If you benefit from this series, please recommend it to your friends and colleagues and suggest they sign up to receive posts regularly.

© 2024 J. Richard Claywell, CPA, ABV, ASA, CBA, CVA, ICVS,  MAFF, CFD, ABAR, ICVS-A, MBV – all rights reserved

 

Richard Claywell is the co-author of Capitalization and Discount Rates: The Value of Risk and contributing author of the NACVA Fundamentals Theory & Techniques training materials. Richard is also the Chairman of the International Certified Valuation Specialist Association. Richard has made presentations on business valuation topics in Germany, China, Korea, and Taiwan. Richard is also a contributing editor to Practitioners Publishing Company’s Guide to Practical Estate Planning (2008). Richard is the chief architect for the Business Valuation Manager Pro business valuation software program and the accompanying Professional Report Writer and contributing author of Financial Valuation: Application and Models.

Richard can be reached at 281.488.7531 or richard@biz-valuation.com