SHORT ANSWER · LIFESTYLE ANALYSIS
What is a lifestyle analysis?
A lifestyle analysis compares what a household actually spent with the income it reported. If spending runs higher, the gap has to come from somewhere: savings, loans, gifts or income nobody disclosed. It is used in divorce and fraud cases. Choosing a tool? Software that prepares statements for this is ranked in the best software to find hidden assets in divorce.
DEFINITION
What is a lifestyle analysis?
A lifestyle analysis compares what a person or household actually spent over a period with the income they reported, to show whether the spending needs a source nobody has disclosed.
HOW IT’S DONE
How is a lifestyle analysis done?
It is built from the bank and card statements, month by month. This isn’t legal advice; the method is described here, and an expert decides how it applies to a case.
- 1
Collect every statement
Every account and card for the period, proven against its printed balances. In Matter 25-117, 18 statements went in.
- 2
Total spending by month
Group money out into housing, cars, travel, schooling and so on, leaving out transfers between the household’s own accounts.
- 3
Set it against reported income
Use pay stubs, tax returns and the financial declaration.
- 4
Explain the difference
Each dollar of spending above income needs a source. The ones nobody can explain become questions. See what are the signs of hidden assets in a divorce.
ZeraBooks builds the workflow around your matters and your template for free. No development charge, whether it’s a forensic department or one person.
A CLOSE COUSIN
How is it different from the net worth method?
A lifestyle analysis looks at spending. The net worth method looks at what someone owns, comparing assets less debts at two dates and adding spending to estimate income. Both rely on complete statements, so a missing month weakens either one.
Both are steps in how do you find hidden assets in a divorce, usually after the statements have been proven and the gaps requested.
Who does a lifestyle analysis?
Usually a forensic accountant or divorce financial analyst working with the attorney. The attorney decides whether one is needed.
Is a lifestyle analysis the same as a budget?
No. A budget plans spending. A lifestyle analysis reports what was spent, from the statements, and compares it with income.
Does ZeraBooks do the lifestyle analysis?
No. It proves every statement and delivers the rows in your workpaper, so the expert starts from complete data. The analysis and any opinion are theirs.
FREE CUSTOM BUILD
Spending is only as good as the statements.
Prove them first.
ZeraBooks proves every bank and card statement in a matter and flags missing months, built free in your firm’s workpaper.