Divorce & CPAs.

• Author: Glenn, Donald A.
• Position: I Want Half.

the U.S. divorce rate was 4.6 percent last year. Those marriages ending in divorce lasted little less than eight years after first and second divorces. Time following a divorce until remarriage averages about three years. As a CPA, you can expect one or more divorces among your clients in any given year, and it won't be smooth sailing. Guiding clients through divorce involves financial and tax planning, technical community property rules and litigation, as well as coping with anger and volatile emotional states.

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Professional Considerations

When clients divorce, you first must decide if you will provide services to one or both spouses. Since, as a CPA, you must be objective, free of conflicts of interest and maintain confidentiality, before providing services to either or both spouses you'll want to consider professional conduct requirements. AICPA Special Report 08-1 "Independence and Integrity and Objectivity in Performing Forensic and Valuation Services" is a useful guide when evaluating acceptance of an assignment.

As with any CPA service, it's important to have a written agreement with your client. It's common for CPAs to become substantially involved in your clients divorce before thinking about an engagement letter. Defining services and a conflict check should be considered during the first phone call. If you are a policyholder, CAMICO offers assistance and sample engagement letters.

Finding a Lawyer

Family law is complex, technical and significantly affects the party's finances. It's imperative for your client to retain a knowledgeable family law attorney. Some clients want to avoid attorneys, particularly when it involves financial matters. But attorneys will become involved at some point and, generally, the sooner the better. Even mediation and collaborative law arrangements, which can be effective, generally involve attorneys.

Family lawyers generally specialize. For attorney qualifications, consider members of the American Association of Matrimonial Lawyers, Family Law Specialist designation; attorneys rated by Martindale-Hubble (www.martindale.com); or referrals from local business attorneys.

Divorce Objectives

The clients' objectives in their divorce may not just be financial concerns. Custody of children, injuries during the marriage and fear of the future make logical, focused thinking intermittent and difficult. The role of both attorney and CPA is to separate the parties legally, physically, emotionally and financially.

Financial Separation: Financial separation generally begins with physical separation and the creation of a second household. This creates a need for temporary child (where applicable) and spousal support. The goal of temporary support is to stabilize the parties and divide available income in an equitable manner. After separation, combined income rarely increases, but the cost of two households increases the party's combined living expenses. So an immediate reduction of the party's standard of living occurs unless...