If you have children or grew up with brothers and sisters of your own, you probably know all about sibling rivalry and family squabbling. The conflicts tend to be fairly mundane. Who got the biggest piece of cake? Whose turn is it to take out the garbage? Who borrowed a favorite sweater without permission? And then the ultimate arbitrator of such important disputes — usually a parent or grandparent — steps in to settle the matter.
But what happens when everyone has grown up and the conflict between siblings or other family members turns to more serious matters involving disagreements among beneficiaries of family trusts or estates? Perhaps one or more beneficiaries, who often are siblings or other relatives, believe the fiduciary (trustee or executor) is mishandling the trust or estate’s finances, is improperly taking funds from the trust or estate, or has improperly or unevenly distributed assets or income of the trust or estate.
“Unfortunately, there rarely is a family member who can step in as the ultimate arbiter to settle the conflict,” said David Anderson, principal of David Anderson & Associates, a Philadelphia forensic accounting firm. “Instead, the unhappy beneficiaries often turn to the courts to resolve the dispute, ending up in litigation that can be very contentious and very expensive.”
The better solution, Anderson said, is for families to turn to a forensic accounting expert to analyze the management and administration of the trust or estate and to account for the assets and transactions.
“A forensic accounting expert has no stake in the matter and is not a family member. He or she is concerned only with the facts of the matter at hand,” said Anderson, who provides a full range of forensic accounting services in Philadelphia and the Delaware Valley. “As a result, both the beneficiaries and the fiduciary can be confident that the forensic accountant’s report will be independent, fair and unbiased. Engaging a forensic accounting expert to settle the conflict is less contentious and less expensive.”
Anderson said a forensic accountant’s report typically identifies the specific documents that govern the administration of the trust or estate and cites specific passages from those documents regarding management of assets, distribution of funds, payment of fees to and expenses of the fiduciary, and related matters. The report identifies the period of time examined, provides a schedule of assets of the trust or estate at both the beginning and end of the time period, and lays out (in either detail or summary form) the transactions of the trust or estate.
Anderson, a forensic accounting expert in Philadelphia and the Delaware Valley, said the report outlines the forensic accountant’s findings regarding the fiduciary’s management of the trust or estate relative to the trust documents, and whether any transactions are in conflict with the governing documents. The forensic accountant will review the report with the beneficiaries and the fiduciary and answer any questions regarding the findings.
While the cost of engaging a forensic accounting expert to analyze the handling of a trust or estate is usually significantly less than the cost of actual or threatened litigation, it is the lessening or neutralizing of the emotional aspects of the dispute that can be even more appealing to families.
“A forensic accountant’s involvement reduces the contentiousness,” Anderson said. “Family members tend to acknowledge that the dispute is in the hands of a professional whose independent analysis will bring peace of mind to everyone involved. The forensic accountant is, in effect, the ultimate arbitrator we grew up with. It’s the next best thing to Mom and Dad.”
Anderson recommends that beneficiaries and fiduciaries engage the services of a forensic accounting expert at the first sign of a dispute — before the matter escalates and family relationships are destroyed.
“Don’t let suspicions of mismanagement fester until things have gotten so bad that there is no hope of repairing the relationship,” said Anderson, whose company offers a full range of forensic accounting services in Philadelphia and the Delaware Valley. “Family is important. Bring in a third party as soon as a conflict arises.”
If you require a forensic accounting expert in Philadelphia and the Delaware Valley, please contact the Philadelphia forensic accounting firm of David Anderson & Associates by calling David Anderson at 267-207-3597 or emailing him at david@davidandersonassociates.com.
About David Anderson & Associates
David Anderson & Associates is a Philadelphia forensic accounting firm that provides a full range of forensic accounting services in Philadelphia and the Delaware Valley. The experienced professionals at David Anderson & Associates provide forensic accounting, business valuation, fraud investigation, fraud deterrence, litigation support, economic damage analysis, business consulting and outsourced CFO services. Company principal David Anderson is a forensic accounting expert in Philadelphia with more than 30 years of experience in financial and operational leadership positions. He is a Certified Public Accountant, a Certified Fraud Examiner and a Certified Valuation Analyst.
