Thorough, compassionate family law legal counsel accomplishes two main things. First, it strives to protect clients’ interests in ideal situations while preparing them for the worst case scenario. Second, the attorney helps the client understand the full landscape of his or her situation so that they can accurately determine what is needed to ensure the best possible outcome. This applies to everything from divorce settlements to custody agreements, and it means knowing how seemingly unrelated financial details could affect your overall case.
One example of a detail that may seem unrelated but can actually affect family law matters is the new revenue recognition standard. Widely accepted by the financial community for years, this financial standard has also been adopted as law by the Financial Accounting Standards Board. Those who know what June 2018 marked in terms of the adoption of ASC 606 don’t need this explanation – they already know how important it is. For the rest of the audience, the ASC 606 standard requires that they fully understand how contract assets and related details are recorded, distributed, tracked, and understood before they continue in their profession. While the standard might be related to the cataloging of complex contracts with clients in the business world, there are potential implications on family law matters.
For example, understanding the fundamentals of ASC 606 contract assets can potentially – though not always – have ramifications on financial documents like net worth statements that could lead the Family Court or involving parties to better understand how much a particular business or enterprise is worth. The same can be true for marital settlements in general. This standard only became law in June of 2018, so many adaptions, interpretations, and improvements to the standards are still being developed. It’s entirely possible that the future may bring further refinements to the contract assets standard that will help family law participants understand complex assets. In the meantime, learning about these kinds of financial details can help family law attorneys better prepare their clients for their cases.
However, it doesn’t just work in favor of the professionals. Anyone learning the details of ASC 606 contract assets can find it helpful to them, whether they’re the subject of the settlement or the one who is requesting that the standard be taken into consideration. This means that contract assets and their recording can also have implications on spousal support factors like the length of marriage that play into alimony arrangements. Additionally, it can come into play on a small number of occasions when dividing up a couple’s property when they divorce. In some cases, the contract assets detailed in a company’s accounting may make the couple’s property division complicated due to the asset’s classification as a current or long-term asset. Additionally, the scope of the contract assets could mean a lot to the overall property division discussion, particularly in firms owned by one spouse and where the company has enormous cash flow.
A deeper understanding of the factors that affect these details can help attorneys when it comes to troubling situations involving complex property division. For example, if two spouses own numerous business entities and are absolutely determined to protect these assets from even the slightest encroachment, having contract assets on hand doesn’t just help clarify one spouse’s “true” position, but it also clarifies whether or not the other spouse is trying to hide assets for purposes of protecting their own positions. This means that greater knowledge of these financial details can benefit clients in the long run.
While learning the full complexity of the ASC 606 contract assets standard isn’t mandatory for family law attorneys, it can nevertheless help them to fully prepare for any possible situation. Learning about various accounting standards like this is just one way to extend one’s own knowledge and understanding of the complexities of assets, the nuances of a client’s case, and the possibilities that might open or close to the client during the course of the settlement process.
