By Joey N. Friedman, CPA, ABV, MAcc, MIB — President, Joey Friedman CPA PA. This article is published by Joey Friedman CPA PA, a Florida professional association. All forensic accounting, business valuation, expert witness, and litigation support services described herein are provided by Joey Friedman CPA PA. Mr. Friedman’s professional credentials and experience are exercised in his capacity as an officer, agent, and licensed CPA practicing under and on behalf of Joey Friedman CPA PA.
Quick Answer
Tracing marital assets across bank, brokerage, and cryptocurrency accounts requires reconstructing the flow of funds from origination to current location. The forensic CPA collects statements, tax records, and exchange transaction histories; identifies transfers between accounts; uses bank deposit analysis and on-chain blockchain explorers to follow crypto movements; and documents every transaction with supporting evidence. The result is a defensible asset map showing what was moved, when, to whom, and the marital-versus-separate character of each asset — admissible in equitable distribution litigation.
In a typical Florida divorce twenty years ago, asset tracing meant working through two or three bank accounts and a few brokerage statements. Today, the same engagement may involve a dozen accounts, multiple brokerages, a Robinhood app, two cryptocurrency exchanges, a cold wallet, an offshore account, and a corporate structure with three LLCs.
The basic forensic accounting methodology hasn’t changed, but the toolkit has expanded. This article walks through how a forensic CPA traces marital assets across the modern financial landscape, where the most common gaps appear, and what counsel needs to know about the records required.
Why Asset Tracing Matters in Florida Divorce
Florida is an equitable distribution state. Marital assets are divided equitably; separate assets are not. The line between marital and separate often hinges on tracing:
- Was the asset acquired during marriage or before? (Pre-marital assets are separate)
- Has separate property been commingled with marital property? (Commingling can transmute separate to marital)
- Has separate property been used to acquire marital property? (Transmutation issues)
- Has marital property been transferred outside the marital estate? (Dissipation or concealment issues)
Each of these questions requires documented tracing from one account to another, sometimes across many years and multiple institutions. Without rigorous tracing, claims of separate property fail; without rigorous tracing, claims of concealment fail.
The Tracing Framework
The forensic CPA’s approach to multi-institution tracing follows a structured framework:
1. Account Inventory
Identify every financial account that could hold marital assets:
- Personal checking and savings (each spouse, joint accounts)
- Brokerage accounts (Schwab, Fidelity, Vanguard, etc.)
- Retirement accounts (401(k), IRA, Roth, 403(b))
- Investment apps (Robinhood, M1 Finance, SoFi)
- Cryptocurrency exchanges (Coinbase, Binance, Kraken, Gemini)
- Cold wallets (hardware wallets like Ledger, Trezor)
- Money market and high-yield savings accounts
- Business accounts (checking, brokerage)
- Trust and estate accounts
- Offshore accounts (where suspected or disclosed)
Account inventory is harder than it sounds. People conceal accounts. The forensic CPA uses tax returns (Schedule B reveals interest-bearing accounts), credit reports, prior loan applications, and discovery responses to build the inventory.
2. Statement Collection
For each identified account, collect statements covering the relevant period — typically extending back to the start of marriage (or longer for separate property tracing) and forward to the present.
For older accounts, statements may not be readily available from the financial institution. Forensic CPAs use:
- Recent statements (typically available 5-7 years on demand)
- Bank archived records (often available 7-10 years, subject to fees)
- Subpoena process (compels production where institution resists)
- Cross-reference from other documents (e.g., tax returns show interest income for years before statements are available)
3. Source and Application Analysis
For each account, every inflow and outflow is classified:
Sources of funds:
- Earned income deposits (payroll, business income)
- Transfers from other accounts (matched to specific source)
- Loan proceeds (documented)
- Gifts and inheritances (documented as separate)
- Sale proceeds (e.g., asset sales)
- Investment returns
Uses of funds:
- Living expenses (housing, food, transportation)
- Asset purchases (real estate, vehicles, investments)
- Transfers to other accounts (matched to specific destination)
- Tax payments
- Gifts and transfers out
The forensic CPA creates a flow chart showing money moving between accounts and entities. This becomes the visual basis for the tracing analysis.
4. Commingling Analysis
When separate funds are deposited into a joint account, the law typically treats this as commingling — separate property may be transmuted to marital. But “commingling” doesn’t automatically destroy the separate identity if proper tracing can show:
- The separate funds were never spent (they remain in the account)
- The separate funds were used to acquire a specific identifiable asset
- The deposit was made under conditions inconsistent with intent to gift to the marital estate
A forensic CPA uses tracing methodologies recognized under Florida law:
- Tracing by exhaustion: assumes withdrawals come from marital funds first, leaving separate funds intact
- Tracing by intent: looks at the specific use of funds to determine whether marital or separate funds were spent
- Tracing by parallel: identifies separate-fund deposits and parallel separate-fund withdrawals
Florida case law has developed nuanced rules on which tracing approach applies in different fact patterns. The forensic CPA’s role is to document the financial picture; counsel argues the legal characterization.
5. Cross-Institution Reconciliation
Across all the accounts, every transfer between accounts should match: a withdrawal from Account A should correspond to a deposit in Account B (within timing differences). Unmatched movements suggest:
- A hidden account (the money went somewhere we haven’t documented)
- An error in records
- A cash conversion (withdrawn as cash, deposited later or never)
The cross-institution reconciliation often surfaces previously-undisclosed accounts.
Cryptocurrency Tracing
Cryptocurrency adds a new dimension to asset tracing but doesn’t fundamentally change the framework. The blockchain is a public ledger; the challenge is connecting wallet addresses to specific people.
Identifying Crypto Holdings
Several sources can reveal crypto activity:
Bank records. Most people who own crypto have at some point transferred dollars to or from a crypto exchange. Bank records show transfers to Coinbase, Binance, Kraken, etc. The presence of crypto activity is identified there.
Tax returns. The Form 1040 since 2020 has asked about cryptocurrency activity (and increasingly, specific 1099 reporting from exchanges). False “no” answers create both a tracing lead and a tax exposure.
Exchange records. Once you know which exchanges the person used, subpoenas to those exchanges (Coinbase, etc.) produce account records: deposits, withdrawals, trades, and current balances.
Hardware wallets / cold storage. Physical hardware (Ledger, Trezor, paper wallets) can hold crypto outside exchanges. These typically can’t be directly subpoenaed but can sometimes be identified through transfers from exchanges to known wallet addresses.
Tracing on the Blockchain
Once a wallet address is identified, blockchain analytical tools (or manual blockchain explorer analysis) can trace:
- Where the wallet received funds (origination)
- Where the wallet sent funds (destination)
- The transaction dates and amounts (in crypto and converted USD)
- Any “mixing” services used to obscure flows
Wallet-to-wallet transfers can be followed across the blockchain. The challenge is identifying the OWNERS of the wallets at each step.
Valuing Crypto for Florida Divorce
Crypto value swings dramatically. The valuation date matters enormously. For a Florida divorce, the standard practice is:
- Identify holdings as of the valuation date
- Value each holding at the spot price on the valuation date (or an averaged price if highly volatile)
- Document the methodology so the valuation can be replicated
For wallets that the holder claims they “lost the keys to” — a common defense — the forensic CPA’s role is to document the prior balance, the transfer pattern (if any), and the timing of the alleged loss. Court can then decide whether to treat the assets as marital despite the alleged loss.
Offshore and International Tracing
International tracing is the hardest category. Many jurisdictions have bank secrecy laws that limit direct production of records to U.S. legal process.
Tools for International Tracing
- FinCEN FBAR filings (U.S. persons with foreign accounts over $10,000 must file)
- Form 8938 reporting on tax returns
- Mutual Legal Assistance Treaty (MLAT) requests
- Letters Rogatory through international litigation channels
- Subpoenas to U.S. branches of foreign banks (where the parent bank has U.S. presence)
- Wire transfer records from U.S. banks showing international transfers
Common Offshore Patterns
- Caribbean banking centers (Cayman Islands, BVI, Bahamas)
- Swiss accounts (though much less secret than historically)
- Asian financial centers (Hong Kong, Singapore)
- European jurisdictions (Luxembourg, Liechtenstein)
A forensic CPA who has worked international cases can identify the patterns and coordinate with counsel familiar with cross-border discovery.
What Records the Attorney Should Request First
Effective multi-institution tracing depends on complete records. Counsel should request:
- 5+ years of personal federal tax returns (with all schedules)
- 5+ years of business tax returns (if applicable)
- Bank statements for every known account
- Brokerage and retirement account statements
- Credit card statements
- Loan and mortgage applications
- Cryptocurrency exchange records (if any indication of crypto activity)
- FinCEN FBAR and Form 8938 disclosures
- Trust documents
- Business ownership records (operating agreements, K-1s)
- Estate planning documents
The forensic CPA will identify additional records as the analysis surfaces gaps.
When to Engage
Asset tracing engagements should start as early in divorce discovery as possible. The records collection, subpoena process, and analytical work all take time. Engaging the forensic CPA in the initial discovery planning phase allows:
- Targeted document requests
- Coordinated subpoena scope
- Identification of records gaps before they become problems
- Sufficient analysis time before mediation or trial
Frequently Asked Questions
Can a forensic CPA trace assets through complex corporate structures?
Yes. Multi-entity tracing (LLCs holding LLCs holding LLCs) is a standard part of forensic accounting work. Each entity’s records are analyzed and the flow between entities is documented. The complexity adds time and cost but doesn’t change the underlying methodology.
How does cryptocurrency tracing actually work?
Once a wallet address is identified, the blockchain (public ledger) shows every transaction in or out of that wallet. Blockchain explorers and analytical tools follow the flows. The challenge is identifying which wallet belongs to which person — typically established through exchange records or bank records of transfers to/from the exchange.
Can offshore accounts always be traced?
Not always. Strict bank secrecy jurisdictions (some Caribbean and Asian centers) limit direct production. But indirect evidence — wire transfer records from U.S. banks, FBAR/8938 filings, lifestyle inconsistencies — often establishes the existence and approximate magnitude of offshore holdings even when the specific account records can’t be obtained.
What if the other party claims to have “lost the keys” to a crypto wallet?
This is a common defense. The forensic CPA documents the prior balance and any transfer activity around the alleged loss. If the wallet was last seen with significant balance and the “loss” coincides with the divorce, the court can draw appropriate inferences. The legal characterization is up to counsel and the court.
How long does multi-institution tracing take?
A focused 12-month, 3-account analysis may take 6-8 weeks. Complex multi-year, multi-account, multi-entity tracing with crypto and international components can take 4-12 months.
How much does it cost?
Costs vary widely. A focused engagement may run $10,000-$30,000. A complex engagement with multiple entities, crypto, and international components can run $50,000-$200,000+.
Does Joey Friedman CPA PA handle these engagements?
Yes. The firm handles asset tracing for Florida divorces, fraud investigations, partnership disputes, and estate matters — including matters involving crypto, business entities, and international assets.
Working with a Forensic CPA on Multi-Institution Asset Tracing
If you are an attorney handling a Florida divorce involving complex finances, business entities, cryptocurrency, or suspected offshore assets, engaging a forensic CPA early is essential. The methodology in this article works, but it requires records and analysis time.
Joey Friedman CPA PA, through its President Joey N. Friedman, CPA, ABV, MAcc, MIB, provides forensic accounting services to attorneys and individuals throughout Florida. Contact the firm to discuss your specific matter.
About Joey Friedman CPA PA
Joey Friedman CPA PA is a Florida professional association providing forensic accounting, business valuation, expert witness, and litigation support services. The firm is led by Joey N. Friedman, CPA, ABV, MAcc, MIB, who serves as the firm’s President.
All services described in this article are provided by Joey Friedman CPA PA. Engagement letters and professional services are issued by the firm. Joey N. Friedman signs in his capacity as the firm’s President — as an officer and agent acting on behalf of Joey Friedman CPA PA, not in any personal or individual capacity. Mr. Friedman’s professional credentials — including CPA license, ABV (Accredited in Business Valuation, AICPA), and ACFE membership — are exercised under the firm.
To engage Joey Friedman CPA PA, contact the firm:
- Phone: 954-282-9615
- Contact form: Contact the Firm
Disclaimer: This article is for informational purposes only and does not constitute legal, accounting, or tax advice. Engagement of Joey Friedman CPA PA is subject to a written engagement letter executed between Joey Friedman CPA PA and the engaging party. No attorney-client or accountant-client relationship is created by reading this article.
Related coverage from Joey Friedman CPA PA
- Dissipation of Marital Assets: How a Forensic CPA Detects and Quantifies It
- How to Find Hidden Assets in a Florida Divorce
- Can a Forensic Accountant Find Hidden Bank Accounts?
- International Forensic Accounting: Cross-Border Asset Tracing
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This article is part of Joey Friedman CPA PA’s broader practice in forensic accounting service overview. Visit the main service page for a complete overview of how we support attorneys, businesses, and individuals across Florida and nationally in financial disputes, litigation, and forensic engagements.