Legal Definitions - tracing

Tracing refers to the legal process of meticulously following the history, path, or origin of something – whether it's an asset, money, or a sequence of actions – to determine its current status, ownership, or to understand a chain of events. It involves establishing a clear link from a past point to the present.

• Example 1: Identifying Separate Property in a Divorce

  Imagine a couple going through a divorce. One spouse claims that a significant portion of their current investment portfolio should be considered their individual property, not shared marital property, because it originated from an inheritance received before the marriage. To support this claim, their legal team would need to trace the inherited funds from the moment they were received, through their deposit into a specific bank account, and then into the investment vehicles, demonstrating that these particular funds or assets purchased with them remained distinct and were not mixed with shared marital assets.

  This example illustrates tracing by following the financial history of specific funds to establish their character (separate vs. marital) in a property dispute.

• Example 2: Recovering Embezzled Funds

  A small business discovers that an employee has embezzled a substantial amount of money over several months. The employee used some of the stolen funds to make a down payment on a new house and transferred the rest to an offshore account. The business's legal team would initiate a process to trace the embezzled money from the company's accounts, through various transactions, to the down payment on the house and the offshore account. This allows them to identify and potentially recover the misappropriated assets.

  Here, tracing is used to follow the path of stolen funds to identify where they went and what assets they were converted into, aiding in recovery efforts.

• Example 3: Investigating a Digital Security Breach

  A technology company suspects that an unauthorized party has accessed its internal network and potentially stolen sensitive data. To understand what happened, cybersecurity experts would trace the digital footprints left by the intruder. This involves analyzing server logs, network traffic, and system access records to identify the initial point of entry, the specific systems accessed, the commands executed, and the data that was potentially compromised or exfiltrated.

  This example demonstrates tracing by following a sequence of digital actions and movements to reconstruct an event, identify vulnerabilities, and understand the scope of a security incident.