Forensic Accounting and 730 Evaluations in San Diego Divorce Cases

A forensic accountant is a financial investigator who works inside a divorce case. The accountant traces which assets are community and which are separate, values businesses, and reconstructs true income for support. An Evidence Code § 730 evaluation is the same kind of work done by a neutral the court appoints, who reports to the judge. Both matter most when wealth sits in businesses, equity compensation, or mixed-funded property.

Most people searching for a forensic accountant in a San Diego divorce are not asking out of curiosity. Some own a company in Sorrento Valley or a medical practice in La Jolla. Some hold years of unvested stock from a biotech or defense employer. Some are the spouse who has watched a business grow for fifteen years without ever seeing the full books. The shared question underneath is simple and hard at once: what is this estate actually worth, and how much of it belongs to the marriage? That question is the whole reason this practice exists.

The rest of this page follows the order in which a complex financial case actually unfolds in San Diego County. It starts with the asset and who owns it, moves through characterization, valuation, and tracing, and ends with what the numbers mean for division and support.

What a Forensic Accountant Does in a California Divorce

The job starts with two definitions. Community property is, under Cal. Fam. Code § 760, all property acquired by a married person during the marriage while living in California. It is generally divided equally. Separate property is defined in Cal. Fam. Code § 770. It includes what a spouse owned before marriage, what a spouse received by gift or inheritance during marriage, and the rents and profits from those assets. It stays with the owning spouse.

A forensic accountant's work is to sort real assets into those two categories and then put a number on each one.

This is different from ordinary CPA work. A CPA who prepares a family's tax returns works for the family and relies on the figures the family provides. A forensic accountant is retained as a litigation expert. The role is to test those figures, find where they came from, and explain the findings under oath. Many forensic accountants are CPAs, but the work is investigative and adversarial in structure, not compliance work.

The core tasks usually fall into four groups:

• Tracing. This means following money from its source to its current form to establish character. An example is showing that the down payment on a Del Mar house came from a pre-marriage brokerage account.
• Business valuation. This means estimating the fair market value of a closely held company, partnership, or professional practice, including goodwill. Goodwill is the value that comes from reputation and client relationships beyond hard assets.
• Income reconstruction. This means determining what a spouse actually earns, which can differ sharply from the number on a W-2 or K-1. That figure feeds spousal support and child support.
• Cash-flow analysis. This means mapping how money moved in and out of accounts over time, often to explain gaps or unusual transfers.

The expert can come into a case in one of two ways. A party-retained expert is hired by one spouse's attorney and develops opinions supporting that spouse's position. A court-appointed neutral is selected under Evidence Code § 730 and answers to the judge. The next section covers that distinction, because clients confuse the two more than anything else in this area.

Complex-asset cases in the county are filed in the San Diego Superior Court, Family Law Division. The court's local procedures, calendars, and forms are posted at sdcourt.ca.gov.

Evidence Code § 730 Evaluations: Court-Appointed Neutrals

California Evidence Code § 730 allows a court to appoint one or more experts whenever expert evidence is or may be required. The judge can do so on the court's own motion or on either party's request. The appointed expert investigates, writes a report as the court orders, and may testify at trial. The court sets the expert's compensation at an amount it considers reasonable.

In San Diego Superior Court family law cases, § 730 appointments come up most often for business valuations and complicated tracing. Examples include a Rancho Santa Fe real estate development company with layered LLCs, or a founder's equity stake that has been through several funding rounds. Sometimes both sides agree on the appointment. Sometimes one side asks for it and the judge decides.

The structural difference is who the expert works for.

A § 730 report tends to carry real weight, because the judge picked the author. It is still not binding. Evidence Code § 733 preserves each party's right to call its own experts on the same question. That means a spouse can hire a forensic accountant to review the neutral's methods, point out gaps, or offer a different valuation.

The cost of a § 730 expert is usually split by court order. The split does not have to be equal. When one spouse controls most of the money, the court's fee-allocation powers apply, and they are discussed in the cost section below.

For a spouse who has never seen the business's general ledger, a neutral can feel like the first real look at the numbers. For the spouse who runs the business, a neutral can feel like an intrusion. Both reactions are common, and both are part of how these cases work in San Diego.

When Forensic Accounting Becomes Necessary in a High-Asset Divorce

Certain fact patterns lead attorneys to bring in a forensic accountant. The ones below come up again and again in San Diego County. The biotech corridor, defense contracting, coastal real estate development, and established medical, dental, and legal practices all produce estates in which the most valuable asset is also the hardest to measure.

Closely held businesses. When a spouse owned a company before marriage and kept building it during marriage, part of the growth may be separate and part community. California courts use two judge-made formulas to split it. These are case-law doctrines, not code sections.

• ***Pereira v. Pereira* (1909):** The separate-property capital receives a fair rate of return, and the rest of the growth is treated as community. Courts tend to use it when the growth came mainly from the spouse's personal effort.
• ***Van Camp v. Van Camp* (1921):** The community receives a reasonable salary for the spouse's work, less what the family already took out as compensation, and the rest is separate. Courts tend to use it when growth came mainly from the capital or market forces.

The choice between the two formulas can move a large amount of value from one column to the other. Each formula depends on forensic inputs: a fair rate of return, a market salary for a comparable executive, and the business's historical value. Those inputs rest on a sound starting valuation, which the site's page on accurate asset valuation covers.

Deferred compensation, stock options, and RSUs. RSUs are restricted stock units, meaning company shares that are promised but delivered only after a vesting period. Characterization depends on when a grant was made and when it vests compared with the date of separation. Grants made during marriage that vest after separation are often apportioned with a time-based formula. The more grants, cliffs, and refresh awards an executive has, the more the analysis depends on reading plan documents closely.

Real estate portfolios. A rental in Coronado bought before marriage, refinanced during marriage, and paid down with community earnings often carries both separate and community interests. Tracing the down payment, the principal reduction, and the refinance proceeds decides who owns what. The site's page on real estate in divorce goes further into buyouts and portfolio division.

Suspected income underreporting. A self-employed spouse may run personal expenses through a business or defer income around the time of separation. A lifestyle analysis compares what the household actually spent with what it reported earning. When spending far exceeds reported income, the gap becomes evidence of real income. That matters directly for high-income support, discussed on the site's page on child support in high-asset cases.

Transmutation disputes. A transmutation is a change in an asset's character from separate to community, or the reverse. Under Cal. Fam. Code § 852, a transmutation is not valid unless made in writing by an express declaration that is made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected; the section does not apply to certain gifts between spouses of clothing, jewelry, or other tangible personal articles used solely or principally by the recipient spouse that are not substantial in value taking into account the circumstances of the marriage. Section 852 also states that it does not change the law on commingled property. So even without a valid transmutation, mixing separate and community funds can still make tracing necessary.

How the Forensic Accounting Process Works

Engagement usually begins with the attorney and the forensic accountant agreeing on a list of documents. The accountant knows which records will answer the valuation and tracing questions. The attorney knows which discovery tools will get them.

Disclosure and discovery. Each spouse must serve a preliminary declaration of disclosure under penalty of perjury under Cal. Fam. Code § 2104. In a complex case, those declarations are a starting point, not the full picture. Formal discovery follows. It can include Family Law Form Interrogatories (FL-145), requests for production, depositions, and subpoenas to banks, brokerages, lenders, and the business's outside accountants.

Document review. The accountant typically works through:

• Personal and business tax returns across several years
• Bank, credit card, and brokerage statements
• Business financial statements, general ledgers, and QuickBooks or similar records
• Loan applications, which often state income and asset values that differ from what appears in the divorce
• Equity plan documents, grant agreements, and vesting schedules
• Trust instruments, gift letters, and estate records for claimed inheritances

Tracing. The accountant follows each dollar of a disputed asset back to its source. When records are complete, direct tracing ties a specific deposit to a specific purchase. When records are thin, the accountant may use recognized methods, such as showing that community funds were exhausted by family expenses when a purchase was made. That shows the purchase could only have come from separate funds. Tracing succeeds or fails on documentation, which is why old statements from a pre-marriage account can matter decades later. Hidden or foreign holdings add a layer of their own, covered on the site's page on offshore accounts.

Valuation date. Under Cal. Fam. Code § 2552, assets are generally valued as near as practicable to the time of trial. On 30 days' notice and good cause, the court can use a date after separation and before trial instead. For a business whose value has swung sharply since separation, this choice can be as important as the valuation method.

The report. The written report explains the methodology, the documents relied on, the assumptions, and the conclusions. Most complex cases settle, and the report is usually what the settlement numbers are built from. At trial, it becomes the basis for testimony.

Testimony. A party-retained expert can be deposed and cross-examined by the other side. A § 730 neutral testifies as the court's expert, and both sides may question the neutral.

Timeline. In complex San Diego cases, forensic engagements often run for several months alongside the rest of the litigation. The pace depends on how quickly documents arrive and how many entities are involved. The site's overview of the California divorce process shows where these steps fall in the overall case.

Waiting months for a number that decides the financial future is uncomfortable. Knowing the sequence ahead of time tends to make the wait easier to bear.

Forensic Accounting Costs and Fee Allocation in California

Forensic accounting fees vary widely. The main drivers are the number of entities and accounts, the volume and condition of the records, how far back tracing must go, and whether the engagement is a § 730 appointment or a party-retained expert. A single-owner consulting business with clean books is a very different project from a multi-entity real estate operation with years of intercompany transfers. This page does not quote hourly or total figures, because any range would mislead more than it would inform.

The law does address who pays. Under Cal. Fam. Code § 2030, the court must make sure each party has access to legal representation, including early in the case. It can order one party to pay the other's attorney's fees and the costs of maintaining the case. When a request is made, the court must make findings on whether there is a disparity in access to funds. The court must also decide whether one party can pay for both sides' representation. If the findings show disparity and ability to pay, the court must order fees.

Cal. Fam. Code § 2032 adds the standard. An award must be just and reasonable under the parties' relative circumstances. Having some resources of one's own does not by itself prevent the requesting spouse from getting an award. Payment can come from community or separate property, principal or income. Section 2032(d) matters most for forensic work. Before trial, either party can ask the court to find that the case involves complex or substantial issues. With that finding, the court can allocate attorney's fees, expert fees, and consultant fees between the parties.

In practice, this is how a spouse without control of the business can fund a forensic accountant. It is also how § 730 neutral fees get divided in a way that reflects who holds the money.

Court filing fees are fixed by statute rather than negotiated. Cal. Gov. Code § 70670 sets the uniform fee for filing a petition for dissolution, legal separation, or nullity, and for a respondent's first filing. The current amount is published on the San Diego Superior Court fee schedule at sdcourt.ca.gov.

How San Diego Family Law Advocates Works With Forensic Experts in San Diego

A forensic accountant produces analysis. Litigation counsel decides what questions the analysis must answer, gets the records, and turns the findings into a settlement position or a trial theme. The firm's work sits at that point where the two meet.

In a typical engagement, the firm maps the estate along the path this page has followed: each asset, its ownership structure, its likely character, the valuation issues, and the tracing that will be required. From there, the firm designs discovery around what the forensic accountant needs. It prepares for depositions using the accountant's work, and it tests the other side's expert or a § 730 neutral's report for weak assumptions. When the analysis is done, the firm uses it to shape a proposal on division, buyouts, and support.

The firm handles high-net-worth dissolution, legal separation, and post-judgment modification in the San Diego Superior Court. Clients come from La Jolla, Del Mar, Rancho Santa Fe, Carmel Valley, Coronado, Encinitas, Solana Beach, and the broader North County and South Bay communities. A Carmel Valley executive with layered equity grants and a South Bay business owner with a family-held operating company face different facts. Both still need the same discipline around characterization and value. Cases that also involve military retirement benefits, parentage questions, or emergency custody matters raise separate issues.

The firm is not the right fit for everyone. It does not offer low-cost or document-preparation-only services. It is also not built for uncomplicated, uncontested divorces where the assets are a house, retirement accounts, and bank balances everyone already agrees on. In those cases, forensic work would add cost without changing the result. Saying so at the start is part of the service.

The first consultation produces a practical deliverable. It is a fact-specific assessment of whether the asset picture calls for forensic accounting, a party-retained expert, a § 730 request, or none of these.

Schedule a Confidential Consultation About Forensic Accounting in San Diego

Forensic accounting questions look technical, but they often decide the largest numbers in a divorce. How a company's growth is split under Pereira or Van Camp, whether RSUs vesting next year are community, and whether a Del Mar rental was ever truly separate can each outweigh everything else in the settlement. In a consultation, the attorney will ask about the businesses and entities involved, the equity and deferred compensation, the history of how major assets were funded, the date of separation, and who controls the records. Each client leaves with a clear view of which of those factors weigh heaviest and whether forensic work fits the case. For readers whose estate is simple and agreed, a less involved first call may serve them better, and the firm will say so.

To talk through how forensic accounting or a § 730 evaluation may apply to your situation, call San Diego Family Law Advocates at (858) 330-6989 for a confidential consultation.

About this firm and this page. Reviewed by Amy J. Lass, CA Bar No. 246779.