Documents Needed to Perform Forensic Analysis

Prepared by Mercer Capital’s Family Law Services Team

Previously in this series, we discussed the importance of hiring an expert and the documents needed to prepare the marital balance sheet, analyze support and need in a Lifestyle Analysis (aka Pay & Need Analysis), and perform a business valuation.

This month, we conclude our series with the documents needed for other forensics services and valuation services.  There are numerous types of forensics services with which a qualified financial expert can assist, though many of the documents utilized in these analyses are already captured in other divorce-related analyses.

In this post, we discuss documents for arithmetic determinations of separate vs. marital, active vs. passive, and asset tracing. The appraiser/financial expert does not render legal opinions, though, assists with quantifying complex financial issues, while being aware of statutory and case law in varying jurisdictions.

Separate vs. Marital

When equitably dividing the marital estate, assets and liabilities must first be identified/categorized then quantified. As with personal goodwill last month, the analysis does not always stop there as the total value of an asset may or may not be fully marital. The increase in value of a business owned and operated by a divorcing spouse is more complicated (as discussed below). However, in many jurisdictions, a retirement account balance that appreciates solely due to market forces is usually considered passive appreciation, unless, perhaps one spouse has a background in investing and is actively managing the account as part of his/her business activities.

If the appreciation of the date-of-marriage balance is deemed passive, the marital interest in an account can grow from $0 from marital contributions during the marriage and market growth/decline on said marital contributions. For example, say a spouse saves $25,000 towards retirement prior to marriage and continues to contribute post-nuptials with marital money. If the balance at divorce is $100,000, some portion of that may be marital (contributions during marriage plus growth of those contributions), while the original $25,000 plus any market gains on that initial balance during the marriage, may be separate, depending on state statutes.

To perform this analysis, we need:

  • Monthly/quarterly/annual retirement account statements, sometimes dating back to date of marriage
  • Paystubs and/or W-2s detailing contributions over time (if not shown on account statements)

The financial expert will also pull data from the market and maybe even industry indices. The math and methodology are straightforward, and it is likely that financial experts would come up with similar conclusions if each expert is given the same set of financial documents, use reasonable methodologies and both correctly understand how separate vs. marital works in the couple’s jurisdiction.

Active vs. Passive

For active vs. passive analyses of business appreciation, two valuations will usually be necessary: one valuation as of a current date, and one as of the date of marriage. In some jurisdictions, a third is necessary for the date of separation. If a valuation is not available as of the date of marriage, the appraiser can perform a retrospective appraisal. The financial expert should consult with the attorney on the matter to ensure they understand the active vs. passive precedent in the state in which he/she is providing services, as these may differ. The retrospective appraisal will require much if not all the same documentation as the current valuation, just backdated to the date of marriage.

We discussed the documents to obtain for valuation purposes in Part 3 of this series. Additional quantitative and qualitative data may need to be obtained for active vs passive analyses, including:

  • Efforts of the divorcing spouse versus efforts of others (management, leadership, owners, employees)
  • Efforts of third parties
  • Relationships with vendors, customers, etc. (held by a divorcing spouse or other members of management team)
  • Characteristics of the business at the various valuation dates (this may be already gathered in conjunction with the valuation process)
  • Source of additional funding/capital, if applicable

The financial expert will also analyze changes in the industry, regulations, tax rates/law, and the general economy between the valuation dates.

Asset Tracing

Asset Tracing services can be performed in conjunction with analyses of separate vs. marital as well as investigative services for potential dissipation/waste claims. For the latter, before we pursue these analyses, there are typically two questions to consider.

  1. What is being investigated?
  2. How much time/effort/money may be required to investigate and corroborate the dissipation analysis?
    • This can be a difficult answer for forensic professionals, as we may or may not yet have an understanding of scope, level of documentation involved, etc. In our experience, progress updates typically assist the process.

Key documents to “follow the money” in tracing exercises are monthly bank statements and credit card statements. This analysis can become complicated when there are numerous bank accounts, but money usually transfers in and out of a bank. Tracing cash that doesn’t make its way to a bank, whether personal or business-related, becomes a bit more difficult but the analysis can be handled. The documents requested will vary, but many such analyses will require relevant bank statements and general ledgers if a business is involved.


A financial expert can help focus the scope of a divorce case, saving time and money throughout the process, particularly if brought in early to the process with ample time to assist with the various stages of the case. We help engagements be as efficient as possible, hoping to reduce the need to update our analysis, which can drag out the process and lead to higher costs for clients. For more information or to discuss your matter with us, please don’t hesitate to contact us.

Essential Financial Documents to Gather During Divorce Series

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