What is asset tracing?
Asset tracing is a process whereby forensic accountants and investigators ‘follow the money’ by locating assets of value to an individual or company that have been hidden or misappropriated.
How is asset tracing useful in family law and commercial disputes?
When there is commingling of assets, as often seen in family law or commercial disputes, it can become difficult to identify asset ownership and asset value. In these instances, asset tracing is used to determine the source of the asset and how the asset has been used prior, and in the course of the dispute. Asset tracing can also reveal hidden assets, undervalued assets, or undisclosed sources of income.
For example, in the event of a divorce/separation with commingled assets, there is additional complexity in classifying the asset as a matrimonial asset (owned by one or both spouses or where an equitable interest exists) or a third-party asset (where the parties have no equitable claim).
Asset tracing can help to classify and separate the components of the asset by determining what assets were:
- Acquired during the relationship;
- Acquired prior to relationship;
- Acquired post separation;
- Disposed of during the relationship;
- Disposed of post separation;
- By nature a gift, inheritance or bequest;
- The source of the funds used to acquire the asset(s); and
- Analysing the nature of all expenditure during the relevant period.
If separate property has been commingled (or mixed) with marital/community property, a tracing analysis may be necessary to track the separate components of the asset over the period of the relationship or the time since the asset was received.
There are various complex apportionment and priority rules that can be applied to trace assets in a family law matter or commercial dispute, including:
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The tracing method adopted is largely dependent on the extent and completeness of the information available.
So, what does this all mean?
Understanding the origin of assets in litigation disputes can be extremely difficult, and failure to appropriately trace assets could impact a settlement significantly. We’ve provided expert opinions in a number of family law and commercial disputes and combining that knowledge with our asset tracing experience means reliable advice and a more accurate outcome.
Contact our team of experts today for advice on asset tracing in family law and commercial disputes.
