Artificial Intelligence speeds Lifestyle Analysis for Family Law firms

Division of assets can be a time-consuming process in even the most cut-and-dry divorce cases. However, if you are a family law professional you know just how much extra time an accurate lifestyle analysis, identifying all relevant income, expenses, accounts, and balances  can take in these situations. Multiple businesses, dozens of accounts, complex travel schedules, and high numbers of joint (or separate!) assets create extra layers of complexity, and it can take weeks—if not months—to manually extract and verify the necessary data before analysis can even begin. 

Thankfully, advancements in data analysis Software as a service (SaaS)  have made incredible progress in simplifying lifestyle analysis and financial conflict resolution in cases of divorce. Now more than ever, legal professionals are capable of taking on the burden of accurate data preparation—including the flow of funds into, out of, and between different accounts and entities as well as the categorization of funds use—so attorneys and associates can use their time in areas of higher impact. 

Data Challenges of Lifestyle Analysis and Financial Conflict Resolution

The major difficulty with lifestyle analysis in divorce cases lies in the data. There is more data in general and data preparation in these cases involves a few critical yet time-consuming processes. Let’s take a look at each. 

Finding and compiling records

Divorce goes hand-in-hand with complex finances, which makes gathering records and financial evidence a big challenge. The more financial assets involved, the messier the records tend to be.They often include multiple bank accounts and a sea of digital records along with boxes of physical records, statements, and checks to sort through. Tracking down and compiling all of these records can take weeks of work and greatly complicates the process of accurate data preparation.

Data preparation is usually the responsibility of an associate or paralegal within the firm. The process typically begins by creating a spreadsheet for each account,  and transactions are extracted through a manual and error-prone process. Given the years of data and the volume of multiple accounts involved, this task can be exceptionally tedious, often taking days or even weeks. Following this, the complex job of deciphering transfers between accounts and identifying any unknown accounts adds significant time and labor. This all must be completed before any real analysis can start.

Uncovering hidden assets

Traditional methods of gathering financial data for lifestyle analysis are often ill-equipped to uncover hidden assets, identify marital waste, or untangle commingled assets. Gaps, errors, and complex transfers can render financial data unintelligible—and that is before considering any manipulation or concealment that may take place to obscure personal finances. 

Divorcees can use a number of tactics to hide or cloud the value of assets in the hope that they’ll be able to come out ahead. Some of these tactics include: 

• Transferring assets between personal and business entities to make them harder to trace.
• Hiding income or assets within complex corporate structures or offshore accounts.
• Underreporting income or overvaluing liabilities to reduce the apparent value of marital assets subject to division.
• Inflating expenses or debts to reduce the amount of income available for equitable distribution. 
• Manipulating financial records or falsifying documents to misrepresent the financial status of a business or individual.

Especially in a contentious divorce where one or both partners want to withhold assets from the other, these tactics significantly draw out investigation times and can add months to the process of lifestyle analysis. 

Categorizations of transactions

Categorization is another key part of lifestyle analysis. Determining how joint finances were used can have a huge impact on how assets are divided. For example, it is important to determine whether an expense on a joint account was used to provide for the couple’s children or on one partner’s outside relationship. Categorizing transactions in this way is crucial, but also extremely labor intensive.

Benefits of Using a SaaS Technology Solution such as Valid8

SaaS technology is well equipped to aid in these processes, greatly expediting the entire lifestyle analysis. The right technology solution can help in a number of ways. 

Faster time to analysis

AI driven SaaS technology is a great option for data extraction and compilation tasks that would otherwise be time-consuming and labor-intensive. The right tool should quickly and accurately compile and verify the relevant data from financial records in a way that drastically shortens the whole data preparation period so lifestyle analysis can be concluded sooner. 

Many family law practices are turning to Valid8 as an ideal tool for divorce cases. Valid8 utilizes highly accurate machine learning that extracts transactions from bank, brokerage and credit card statements in a way that allows lawyers to quickly perform a ‘sniff’ test to identify possible marital waste and financial obfuscation. Valid8’s artificial intelligence identifies which transactions require a deeper dive. This minimizes the data preparation load, enabling the professional to focus their time on expert analysis and interpretation. 

Valid8 also makes it simple to determine a standard of living, and complete inventory of accounts and acitivites backed by evidence. Legal professionals can simply upload statements to Valid8 and get a complete picture of all income sources and spending habits.

AI Auto-categorization of expenses

Once all financial data has been extracted, verified, and organized, technology can easily classify transactions into categories. This auto-categorization not only accelerates data preparation, it also increases the value of the data by enriching it with critical location and counterparty labels. Additionally, it streamlines the ability to visualize cash flow in and out of accounts.

With Valid8, professionals can simply upload their banking transactions from bank statements, brokerage statements, check images, deposit slip images, and accounting systems, and the Valid8 platform does the rest. AI categorization classifies banking transactions by: 

• Type
• Location
• Main category (retail, travel, etc.)
• Subcategory
• Counterparty (person, vendor, merchant, etc.) 
  

Once the data has been categorized, professionals can review and make any desired changes using Valid8’s custom categorization option. The categorized data can then be exported to Excel or as a statement of cash.

The Future of Lifestyle Analysis in High Net Worth Divorce

Although high net-worth divorce cases come with a lot of complex challenges, lifestyle analysis doesn’t need to be a costly, months-long manual process. AI-driven SaaS solutions can play a pivotal role in lifting the burden of data preparation busywork, compiling an accurate picture of all the financial assets at play in the case. This empowers the professionals involved to spend more of their time on analysis and strategy, even enabling them to take on more cases in a shorter amount of time.

Valid8’s Verified Financial Intelligence platform helps you quickly and accurately perform lifestyle analysis, find undisclosed assets, and uncover marital waste without undue time or attention and without taking resources away from other complex cases.

If you’d like to take the first step toward streamlining the lifestyle analysis process, Valid8 can help you get there. Schedule your free 30-minute demo and let our team show you how you can reduce manual work and increase accuracy in your high net-worth divorce cases.