Ron J. Anfuso, CPA/ ABV, An Accountancy Corporation

Ron J. Anfuso, CPA/ ABV, An Accountancy Corporation We provide litigation support services including analysis of financial, accounting & tax aspects of marital dissolution matters & expert witness testimony

Why Ron J. Anfuso, CPA/ABV, An Accountancy Corporation is A Better Choice

Communicating directly with Ron doesn't stop when you send us Forensic Accounting work...it begins

Ron and his staff always welcome calls from referring attorneys AND their clients... regardless whether it is prior to beginning casework, when engaged in our assignments or after completing our work. Even if you have been se

rviced by a staff person, you can contact Ron directly anytime. If your call is urgent and he is tied up in court when you call, he will get back to you as soon as he can make himself free. He will respond to all other calls from attorneys and clients within one business day. This is his promise. Settlements

When the referring attorney's and his or her client's goal is to achieve a settlement, Ron and his staff conduct their work solely with that objective in mind. Referring attorneys know Ron and his staff provide accurate, thorough work that helps attorneys achieve the best possible settlement outcomes for their clients. Completing Work On Time

Completing work on time is not that difficult! Yet, we frequently hear frustrations from attorneys about some Forensic Accounting firms. Meeting deadlines requires meticulous planning prior to beginning work on a case. It also demands careful delegation and timely completion of tasks. Most importantly, firms should never take on a case unless they have the qualified manpower to timely handle the work. This is our policy and is why referring attorneys have found they can count on us to meet their deadlines. Preparation for Testimony

There are three questions many Forensic Accountants never want to hear from referring attorneys:

Are you going to be the one who will testify in court? Will you guarantee no emergency in your practice will cause you to send an unprepared staff accountant to testify in your stead? Are you going to study the case and prepare yourself so well that you won't be caught off guard under tough cross examination? Many attorneys know Ron Anfuso consistently delivers outstanding testimony. However, not many know Ron Anfuso handles all expert witness testimony for the firm. He has made over 325 straight court appearances without substitution. His goal is to double this streak. Regardless whether Ron assigns a case to a staff person, he knows exactly how far in advance he must begin preparation for his testimony. Ron defines each task he will need to perform in planning for his appearance and sticks to that plan. The result is thorough preparation, including for the "unexpected", and consistent ex*****on in court. Expert Witness Testimony

There are several reasons why Ron J. Anfuso is so effective in court. Perhaps the one that sets him furthest apart from most Forensic Accountants is how much he welcomes being challenged under the most difficult circumstances.

06/15/2026

In re the Marriage of Cindy and Ralph Peters
(Cindy Peters, Petitioner and Respondent, v. Ralph Peters, Respondent and Appellant) Part 2

Ron's Corner
When undisclosed accounts are discovered after entry of a support order, practitioners should obtain complete bank records and engage a forensic accountant to perform an income-testing analysis. Even where the account balances themselves are not dispositive, tracing deposits and withdrawals may reveal income available for support that was never disclosed to the court.

In this issue of Forensic Accounting Today, I continue with the second part of the article to examine the case involving a husband who concealed two bank accounts from his wife, accounts that together held $787,112. Appointed by the court as a forensic accounting expert under California Evidence Code §730, I was tasked with determining the husband’s gross cash flow available for support. I served as the sole forensic accounting expert for the trial proceedings.

Because this case was not published, I have used fictitious names and adjusted certain dates and financial figures to preserve confidentiality.
Ron

Cindy’s Motion to Vacate the 2016 Support Order
On July 21, 2016, Cindy filed a Request for Order (RFO) seeking to vacate a prior support order after discovering evidence that Ralph had allegedly concealed significant financial information from both the court and the parties. Specifically, Cindy alleged that Ralph created various LLCs and trusts to hide assets and failed to disclose two bank accounts into which more than $787,000 had been deposited. These accounts were not disclosed during the proceedings that led to the 2016 support order, nor were they provided to me during my court-appointed assignment to perform a cash flow analysis.

The previously undisclosed accounts came to light after subpoenas were issued to several financial institutions in connection with Ralph’s earlier request to reduce his support obligation. In response, Cindy obtained hundreds of pages of bank records, including account statements and copies of negotiated checks, revealing financial activity that had not been previously disclosed.

In support of the motion, Cindy’s counsel argued that the family court possessed the inherent authority to vacate the 2016 order because it had been procured through fraud. Counsel further asserted that the three-year statute of limitations for fraud claims under Code of Civil Procedure §338(d) was tolled by Ralph’s concealment of the accounts. Cindy requested that the court vacate the existing order, establish child support at $10,114 per month based upon my 2016 cash flow analysis, and award attorney’s fees, costs, and sanctions pursuant to Family Code §271 and Code of Civil Procedure §128.5.

As part of the proceedings, Cindy retained me to analyze the newly obtained financial records. In my declaration, I explained that Ralph had failed to report or had significantly understated income available for support. Using the same income-testing methodology I had employed as the court-appointed expert, I examined deposits into both the disclosed and newly discovered accounts. Total deposits exceeded $1.24 million. After excluding identifiable law firm income, credit-line transfers, and other non-income items totaling approximately $975,000, I determined that Ralph had an additional $66,170 in income available for support beyond what had been reported to the court.

The Evidentiary Hearing
The motion to vacate proceeded to a seven-day evidentiary hearing that began in June 2020 and concluded approximately one year later. Ralph and I were the only witnesses. My testimony alone spanned more than four and one-half days.

Early in the proceedings, the court directed Ralph’s counsel to address disputed items in my income-testing analysis. After reviewing supplemental documentation provided by counsel, I made several adjustments that gave Ralph the benefit of the doubt regarding certain deposits. The court accepted the revised analysis, which became the primary financial framework for the evidentiary hearing.

During my testimony, I explained that discovery had become problematic. Although Ralph produced numerous bank records, law firm documents, and tax filings, he failed to disclose records relating to the two previously undisclosed bank accounts. I testified that the omission was material because those records contained information that could have significantly affected the outcome of the original support determination.

In my subsequent engagement for Cindy, I applied the same methodology previously used as the court-appointed expert, this time incorporating the newly discovered accounts. Through extensive tracing of financial transactions from 2016 through 2021, I identified deposits consisting of law firm income, partnership draws, salary, firm-related transfers, perquisites, and other sources of income. Using Dissomaster™️ calculations, I determined that Ralph’s monthly child support obligation should have been approximately $957 higher than the amount previously ordered. My analysis further indicated that his corrected monthly support obligation for 2019 should have been $9,326.

Ralph attempted to explain several questioned transactions, including a $120,000 transfer that he claimed represented a loan against his 401(k), a $75,000 transfer related to a rental property transaction, and a $60,000 withdrawal that he asserted came from a life insurance policy. However, supporting exhibits were not properly introduced into evidence, nor was there a stipulation regarding their admissibility. As a result, the court expressed concern regarding the evidentiary foundation for these explanations.

At one point, the court criticized Ralph’s counsel’s examination as disorganized and confusing. The court observed that my report provided the only comprehensive analysis tracing the source of the disputed funds. The court ultimately relied upon my testimony and calculations regarding Ralph’s available income.

Following the close of evidence, the parties submitted post-hearing briefs addressing the admitted evidence and applicable law. Cindy argued that the court should vacate the support order pursuant to Family Code §2122, which authorizes relief from a judgment obtained through actual fraud.

In the next issue of Forensic Accounting Today, I will discuss the family court’s ruling and the appellate court’s analysis of the case.

05/12/2026

In re the Marriage of Ralph and Cindy Peters
(Cindy Peters, Petitioner and Respondent, v. Ralph Peters, Respondent and Appellant)Part 1

In this issue of Forensic Accounting Today, I examine a case involving a husband who concealed two bank accounts from his wife, accounts that together held $787,112. Appointed by the court as a forensic accounting expert under California Evidence Code §730, I was tasked with determining the husband’s gross cash flow available for support. I served as the sole forensic accounting expert for both the trial proceedings and the subsequent appellate matter.

Because this case was not published, I have used fictitious names and adjusted certain dates and financial figures to preserve confidentiality.

Ralph and Cindy Peters were married in January 2001, and their marriage was dissolved by judgment on January 20, 2011. They had three children together.

Ralph is an attorney who has practiced consumer law for 23 years as an equal partner at the Law Offices of Peters and Walton, Inc. (“P&W”). During the years relevant to this matter—2014, 2015, and 2016—he remained an equal partner in the firm.

Throughout the period at issue, Cindy was not employed outside the home. Under the marital settlement agreement incorporated into the judgment of dissolution, Ralph and Cindy agreed to share joint legal custody of their children, with Cindy retaining primary physical custody.

Ralph initially agreed to pay monthly child support of $5,200 and spousal support of $4,000. The parties later stipulated to an increase in Ralph’s custodial time with the children, resulting in a reduction of his monthly child support obligation to $4,500.

If you have questions regarding this case or the forensic issues involved, I would be pleased to assist.

In this issue of Forensic Accounting Today, I begin a multi-part review of a family law matter involving concealed income, undisclosed financial accounts, and the modification of child support obligations. The case centered on whether a former spouse intentionally withheld material financial information from the court when seeking a post-judgment child support order.

Ralph Peters appealed the family court’s decision granting Cindy Peters’ motion to vacate a prior post-judgment child support order. The trial court found that Ralph had intentionally concealed income by routing nearly $800,000 through undisclosed bank accounts, thereby preventing the court from accurately assessing his true cash flow available for support. As a result, the court modified Ralph’s child support obligation retroactively to 2016, the date of the challenged order.

On appeal, Ralph argued that the trial court relied on the wrong provision of the California Family Code when granting Cindy’s motion. He contended that the proper statute was Family Code Section 3691, which governs motions to set aside support orders based on fraud, and that Cindy’s request was barred by the applicable six-month statute of limitations. Ralph also challenged the evidentiary basis for the court’s findings, asserting that the record did not support a conclusion that he concealed income and, in fact, showed that he had overstated his income at the time of the original support order.

The appellate court rejected these arguments. It held that Ralph forfeited his statute of limitations defense by failing to raise it during the evidentiary hearing on Cindy’s motion to vacate. More importantly, the court found substantial evidence, which supported the trial court’s conclusion that Ralph had committed fraud by concealing financial information when the 2016 support order was entered. That evidence included extensive unrebutted expert testimony and financial analysis presented to the court.

Order Modifying Support
On July 10, 2014, Ralph filed a Request for Order (RFO) seeking modification of child custody and spousal support. In October 2015, the family court appointed me pursuant to Evidence Code Section §730 to analyze Ralph’s gross cash flow available for support. On February 10, 2016, Cindy filed her own RFO seeking modification of spousal support, and both matters were set for a combined evidentiary hearing in a long-cause courtroom.

Shortly before the hearing, Ralph submitted an Income and Expense Declaration reporting a substantial decline in earnings from the prior year. He attributed the decline to the burdens of ongoing family law litigation, claiming the proceedings had reduced his income by approximately 60 percent. He also represented that he had begun dissolving his law partnership.

Ralph’s declaration reported current monthly wages of $21,200 and self-employment income of $24,300 per month through June 30, 2016. Based on the limited financial information then available, I calculated additional monthly perquisite income of $5,240.

The court found that Cindy had no income and declined to impute earnings to her. Using my guideline support analysis through DissoMaster, the court ordered Ralph to pay $5,200 per month in child support effective January 1, 2017, continuing until the children reached the age of majority, provided they remained living at home and otherwise eligible. The court also ordered Ralph to pay $5,050 per month in spousal support from January 2017 through January 2018.

Ralph’s Request to Reduce Support
In September 2016, Ralph filed another RFO seeking to reduce both child and spousal support to zero. In his declaration, he claimed he had obtained an injunction prohibiting him from drawing a salary from his law firm, P&W. He further asserted that although he continued to work approximately 30 hours per week at the firm, he was receiving no compensation.

The court was presented with evidence regarding the impending dissolution of the law practice. However, it received no credible evidence explaining Ralph’s continued self-employment income or how he could continue working while receiving no compensation. The court denied Ralph’s request, finding that he failed to demonstrate a material change in circumstances sufficient to justify a modification of support.

The court also found Ralph’s position lacked credibility. The judge specifically questioned how Ralph could continue working without compensation and expressed concern that his claimed lack of income may have reflected undisclosed earnings, whether diverted through the firm or received from other unreported sources.

In the next issue of Forensic Accounting Today, I will discuss Cindy’s motion to vacate the 2016 support order, where the financial analysis expanded significantly and the evidentiary record revealed the concealed accounts and cash flow that ultimately became central to both the trial court’s ruling and the appellate decision.

04/06/2026

Thought California is a No-Fault State

Although California is a no-fault divorce state, a growing trend exists toward financial fault rulings in cases of fiduciary breach of duty. In this and following issues of Forensic Accounting Today, I will examine the tendency away from no-fault dissolution decisions for certain financial aspects of cases. The topics I will address include:

• Fiduciary fault based on Family Codes §1100 and §1101
• Disentitlement
• Bad behavior post petition and Family Code §271
• Financial acts occurring before separation
• Financial acts occurring after separation
• Attempts by a party to take advantage of his or her own wrong.

We will also explore a form of fiduciary breach that has not deviated from no-fault rulings, which involves written marital agreements and breaches of contracts.

In this issue we will consider Family Codes §1100 and §1101 and the Disentitlement Doctrine. If you have questions or comments concerning no-fault exceptions, I welcome you to post them on my blog or contact me directly.

Ron

Yes, of course, California is a no-fault state. However, no fault relates only to grounds for the termination of a marriage. Financial fault, on the other hand, has no limits. It can lie in the past, present or future. In fact, it seems that as time passes and cases grow, in law, the theories for asserting financial fault have increased. You might say that financial fault is trending.

There may have been instances in which Appellate Courts have ruled in favor of fiduciary faults. Let us first take a look at Family Code §1100 and §1101.

Family Codes §1100 and §1101

Under Claim for Impairment of Community Property Interest, section g and h read: (g) Remedies for breach of the fiduciary duty by one spouse, including those set out in Sections 721 and 1100, shall include, but not be limited to, an award to the other spouse of 50 percent, or an amount equal to 50 percent, of any asset undisclosed or transferred in breach of the fiduciary duty plus attorney’s fees and court costs.

The value of the asset shall be determined to be its highest value at the date of the breach of fiduciary duty, the date of the sale or disposition, or the date of the award by the court.

(h) Remedies for the breach of the fiduciary duty by one spouse, as set forth in Sections 721 and 1100, when the breach falls within the ambit of Section 3294 of the Civil Code shall include, but not be limited to, an award to the other spouse of 100 percent, or an amount equal to 100 percent, of any asset undisclosed or transferred in breach of the fiduciary duty. (Am Stats 2001, C703).

When the family law court chooses to apply Section 3294 of the Civil Code, it allows for a spouse to recover actual damages, and damages for the sake of example should the breach of an obligation be proven by clear and convincing evidence that the other spouse has been guilty of oppression, fraud or malice. This section defines fraud as “intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.
The Disentitlement Doctrine

When a party unlawfully withholds evidence of his or her income and assets he or she will not be heard to complain that an order is not based on the evidence being refused to disclose.

The Marriage of John and Lisa Hofer (2012) 208 Cal.App.2d 100 is an excellent example of a disentitlement ruling in which John was ordered to pay Lisa’s attorney fees and costs pursuant to Family Code § 2030. In this case, John failed to disclose evidence of the value of several family businesses of which John was a part owner.

During their marriage, Lisa did not work outside of their home. John, on the other hand, was the sole manager of the assets in which he had ownership interest. The parties did not dispute that John had substantial income and assets derived from these business interests. However, Lisa had no idea just how substantial the assets were.

Despite three discovery requests made by Lisa, John failed to produce any records. John never denied that he could obtain the documents. Rather, he asserted that the business entities owned by his family and John would not allow him to disclose any financial information. Despite this claim, Lisa moved to compel the responses. The trial court sanctioned John $7,500.

Lisa then made a new motion to compel John to appear for a deposition and produce the documents. The discovery referee found that John was properly served but never appeared for his deposition. As a result, the referee recommended the court grant Lisa’s motion and sanction John for $5,670 in attorney fees and costs. The court adopted this recommendation.

The referee stated, “Without these documents, Lisa cannot determine what, if any interest, the community has in any assets, nor can she rebut John’s assertion that assets are his separate property.”

John was given one more chance to produce the documents before being precluded from presenting evidence that the business entities were his separate property. He again failed to do so. At this point, John was able to keep his fees to his attorneys current, which amounted to more than $300,000. Because the extent of John’s resources were not known and he demonstrated his ability to pay his attorneys, as well as Lisa having no resources of her own, the court ordered John to pay Lisa a contribution to her attorney’s fees and costs an unallocated sum of $200,000.

The disentitlement doctrine enables an appellate court to stay or dismiss the appeal of a party who refused to obey a superior court’s legal orders. In this case, the appellate court chose to dismiss the case due to its inherent power to use its processes to induce compliance with a presumed valid order.

03/18/2026

Choosing a Financial Professional for a Collaborative Divorce (Part 3)

Ron's Corner
In Issues 85 and 86 of Forensic Accounting Today, I delved into the process of selecting a fully qualified financial professional for a collaborative divorce. In most cases, achieving the most equitable outcome necessitates the expertise of a CPA who has undergone comprehensive training and gained proficiency in several specialized areas of accounting. This level of expertise demands a comprehensive understanding and application of knowledge and skills, which I explored in Issues 85 and 86.

Furthermore, I began to discuss the specific areas of expertise required by the CPA in most collaborative cases. In Issue 85, I focused on business valuation and determining reasonable compensation. In Issue 86, I focused on determining gross cash flow available for support, determining marital standard of living, apportionment, and California Family Code Section 2640. I complete the expertise that the financial professional should possess in this issue with an overview of Moore/Marsden and tracing.

To download a copy of the previous newsletters, go to https://anfusocpa.com/forensic-accounting-newsletters. If you have any questions regarding these topics, please do not hesitate to reach out to me.

Moore/Marsden Calculations (and Watts Charges as an Example)

California law employs a formula known as Moore/Marsden for apportioning community property equitable interest in a separate property residence at the conclusion of a marriage. This calculation accommodates the growth of the marital community’s value, which would otherwise be considered separate property. A Moore/Marsden calculation determines the community property interest in a spouse’s separate property asset, typically real estate. These calculations are derived by determining the principal amount paid during the marriage divided by the purchase price. This percentage is then applied to any appreciation in the property’s value at the current date. It is not uncommon for a financial professional or even a court to err in the application of a Moore/Marsden calculation. Therefore, it is crucial to engage a forensic accountant with extensive experience in cases involving Moore/Marsden calculations. This is exemplified in the following scenario.

In the case of Jodie Mohler vs. Greg Mohler (https://anfusocpa.com/wp-content/uploads/newsletters/Newsletter-56.pdf), Jodie’s attorney argued that the court should consider the principal pay down from the date of marriage to the date of trial as community property for Greg’s purchase before their marriage. The trial court erred by accepting this argument even though I testified that the payments from earnings post-separation were from my client’s separate property.

Due to my testimony disputing this assertion, the Appellate Court found that the trial court was incorrect in using the Moore/Marsden calculation to increase the community’s beneficial ownership due to payments made from Greg’s separate property beyond the date of separation. Moore/Marsden is based on the concept that community property is being invested in separate property by creating it. Therefore, during the marriage, only the portion of community assets used to pay off loan principal was relevant in establishing the community interest in the property.

A secondary issue the appellate panel addressed dealt with whether or not Watts Charges should be applied on a pro tanto basis (In re the Marriage of Watts (1985) 171 Cal.App.3d 366, 373-374). Watts Charges are applied when one spouse uses community assets after separation. This could be living in the family home, using the party's shared vehicle, or credit card spending. Since the Mohler case had a community property equitable interest in Greg’s separate property, as a case of first impression, the panel opined that perhaps this should be addressed.

In the case of Mohler, Watts’ Charges were considered because Greg continued to reside in their previously shared home after their separation for approximately seven years.

Tracing

Tracing typically becomes an issue when community and separate property funds are commingled in the same account(s) with community property, and then an asset is purchased with funds from that account. The mere commingling of separate property moneys in a community bank account does not destroy the separate property character of the funds, provided they can be adequately traced.

A spouse may protect the character of his or her separate property by refraining from commingling it. However, if the spouse chooses to commingle the property, they assume the responsibility of maintaining adequate records. The documentation must be sufficient to establish either the direct tracing or the balance of community income and expenditures at the time an asset is acquired with commingled property.

Property acquired by purchase during a marriage is presumed to be community property (Family Code §760), and the burden falls on the spouse asserting its separate character to overcome the presumption. Mason v. Mason (1960) 186 Cal.App.2d 209, 212; Estate of Niccolls, (1912) 164 Cal. 368; Thomasset v. Thomasset, (1953) 122 Cal.App.2d 116.

Nevertheless, some couples acquire separate or mixed assets over time. If there is a dispute regarding whether a property or properties are separate property, the situation necessitates the obligation to validate separate property claims. This is a challenging task, but with the appropriate information, it can be accomplished.

When there is a disputed asset or assets, direct tracing can be employed if the withdrawal from the commingled account used to acquire the disputed assets can be traced to a specific separate property deposit or deposits into an account. This requires expertise in tracing by a forensic accountant who has received adequate training and experience in tracing.

For direct tracing to be used:
1. The tracing spouse must have specific records. In re Marriage of Marsden (1982) 130 Cal.App.3d 426;

2. The specific records establish that on the date that the separate expenditure was made, there were separate funds available in the account to make the purchase. In re Marriage of Higinbotham (1988) 203 Cal.App.3d 322; and

3. The tracing spouse had the intent to utilize the separate funds to make the purchase. Estate of Murphy (1976) 15 Cal.3d 907, 918; In re Marriage of Frick (1986) 181 Cal. App.3d 997, 1010-1011, 226 Cal.Rptr. 766.

03/18/2026

Choosing a Financial Professional for a Collaborative Divorce (Part 2)

In Issue 85 of Forensic Accounting Today, I delved into the process of selecting a fully qualified financial professional for a collaborative divorce. In most cases, achieving the most equitable outcome necessitates the expertise of a CPA who has undergone comprehensive training and gained proficiency in several specialized areas of accounting. This level of expertise demands a comprehensive understanding and application of knowledge and skills, which I explored in Ron’s Corner Issue 85.
Furthermore, I began to discuss the specific areas of expertise required by the CPA in most collaborative cases and focused on one of these areas—business valuation and determining reasonable compensation. In this issue, I continue to address the areas that are often necessary. If you have any questions regarding any of these topics, please do not hesitate to reach out to me.

Determining Gross Cash Flow
Available for Support

It is not unusual for a sizable portion of income generated from employment or by a self-employed business owner to be in the form of perquisites. The accurate determination and analysis of these “perks” can significantly impact property division, particularly when one or both parties own a business (e.g., during a business valuation). Furthermore, perquisites can pose complex challenges and result in substantial adjustments to the available cash flow for support. Therefore, it is crucial for the financial professional (CPA) to possess a comprehensive understanding of the prevalent types of perquisites and their implications on business valuation and gross cash flow available for support.
The financial professional (CPA) must determine which expenses are necessary for the business and which are personal on an expense-by-expense basis. Reimbursement of expenses that are found to be personal in nature should be considered as possible add-backs to income. These expenses include:
• Automobile expenses
• Entertainment
• Travel
• Education (non-professional)
• Charitable contributions
• Legal fees (personal/dissolution)
• Accounting fees (personal tax preparation fees)
• Life insurance
• Disability insurance
• Medical reimbursements, and
• Pension or profit-sharing plan contributions.
Determining Marital Standard of Living

Calculating marital standard of living (MSOL) can be challenging due to the lack of accurate data. Additionally, reconstructing financial details can be time-consuming and costly. In such cases, you need to decide whether to piece together the financial data or let the court determine the MSOL solely based on testimony and summary information.

The court aims to award the amount of spousal support that best enables each party to maintain a standard of living as close as possible to what they enjoyed during the marriage. Furthermore, the court’s intention is not to award a level of spousal support that allows one party to enjoy a superior standard of living compared to what they benefited from during the marriage, regardless of the circumstances that caused the divorce.
In many cases, financial conclusions can be accurately estimated using readily available sources. Marital expenditures often align with reported taxable incomes, and the courts accept these incomes as a valid measure of marital expenses. However, if the financial situation is complex, such as a business valuation, consulting a forensic accountant is usually the most appropriate approach. Considerations include:
• Ownership of family homes
• Rental properties
• Vacation homes
• Vehicles owned
• Vacations
• Investment accounts and employee benefits
• Debts and outstanding loans
• Social activities and memberships in organizations
• Charitable contributions, and
• Gifts and inheritances received prior to and during the marriage.

In addition to these, courts will take into account the following in determining the extent to which the earning capacity of each party is enough to maintain the standard of living enjoyed during the marriage:

• How long the couple was married
• The ability of the supported party to be employed or earn potential income
• Whether the supported party’s current or future earnings have diminished due to periods of unemployment
• Whether the supported party contributed to the education of the supporting party and how much
• The age, health, and medical needs of the parties, and
• The capacity of the supporting party to pay spousal support based on earned income, unearned income, assets, and earning capacity.

Apportionment

In California, courts may rely on several formulas (Pereira, Van Camp, and Capital Labor Apportionment Model) when determining how to divide a premarital business or investment in a divorce. The forensic accountant needs the expertise to help the court determine which formula to use.

The Pereira Formula is typically used when the business or investment growth is largely due to community efforts, such as management, strategy, or labor during the marriage before separation.

The Van Camp Formula is usually applied when the business or investment growth is mainly because of the natural enhancement of the underlying separate property assets, such as market forces or brand reputation.

The Capital-Labor-Apportionment Model (CLAM) is employed when a case cannot achieve an equitable apportionment via either the Pereira or Van Camp approach. In such cases, the forensic accountant needs to embrace a hybrid strategy that makes appropriate use of both methods. Such a process requires the forensic accountant to possess thorough knowledge and considerable experience in apportionment to think creatively enough to formulate a logical solution that will be clearly understood by counsel and accepted by the court. In such cases, forensic accountants should consider the Capital-Labor Apportionment Model. For this model, the forensic accountant needs to determine and calculate sixteen steps for each year of the marriage. (See Forensic Accounting Today Issue 54: https://anfusocpa.com/wp-content/uploads/newsletters/Newsletter-54.pdf.)

2640 Reimbursements

California Family Code Section 2640 addresses the situation in which one spouse uses their separate property funds to contribute to the acquisition or improvement of community property. Understanding the code’s details and procedures is crucial to ensure that the contributing spouse is reimbursed for their financial contributions. This code section specifically provides for the reimbursement of separate property investments in community assets before the remaining community assets are divided. The reimbursement claim involves:
• Identifying the amount of the down payment: This entails determining the initial contribution made by the contributing spouse.
• Personal property: This involves reimbursing the contributing spouse for their personal belongings that were used in the community property acquisition or improvement.

I will cover Moore/Marsden, and tracing in the third and final part of Choosing a Financial Professional for a Collaborative Divorce.

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