None of her business?

Listen to this one: I recently worked on a divorce case in which the separating couple had agreed to bring in a neutral business valuation analyst, to help ascertain what the husband’s business was worth, in order to craft an equitable settlement that would include spousal maintenance. That’s a smart, prudent, and commendable move.

End of story, right?

Of course not. There are times—too often, unfortunately—when things just don’t “smell right” to my CPA nose. This was one of those times. The business evaluator had drawn up his valuation report, based on the husband’s business’ inventory, property, receivables, and so on. But something just felt wrong to me.

I requested all of the available info—and the business analyst, to his credit, supplied it all.

That’s when I started digging. And here is what I found:

The husband, to his discredit, had effectively attempted to bamboozle the business analyst. The analyst had provided a questionnaire to the husband at the outset of the process—this is one of the docs I’d reviewed—and the husband conveniently left out an important chunk of information which was explicitly requested in the questionnaire. It wasn’t just inventory, or property, or receivables. The questionnaire required that the husband also “provide copies of all employee benefit plans, including deferred compensation.”

Ooops. Must’ve missed that one, huh?

It gets better. The husband, seeing the divorce on the horizon, had decided to get creative with the timing of his contributions to this plan. Turns out he deferred a significant amount of his salary just after filing for divorce, assuming that the deferrals would be considered non-community property.

If only. I was able to spot this discrepancy and rework the numbers to reflect what this previously undisclosed compensation package would be worth if he’d actually contributed to it on a normal schedule. Guess what? All this amounted to several hundred thousand dollars’ worth of difference.

The business analyst, again to his credit, admitted the oversight (and probably walked away from the case a tad more jaded than he’d been before). Bottom line: I was able to help the woman’s attorney re-negotiate from a newfound position of power. There was the amount of the “missing contributions.” There was the amount of the growth on that. There was the increased value of the business. It all added up to more money, over a longer period of time, for the woman. She, and her attorney, were grateful.