When dealing with finances following a divorce or dissolution, both parties are expected to be open and honest about their financial circumstances.
But what happens if you think your spouse has not disclosed everything?
In this article, Family Law expert Megan Spicer looks at how financial disclosure works, what may count as non-disclosure and what you can do if you are concerned that assets are being hidden.
What is financial disclosure in a divorce?
During financial proceedings, both parties have a duty to provide full and frank financial disclosure. This means being open, honest and accurate about their financial circumstances, including their assets, income and liabilities.
Financial disclosure is an important part of reaching a fair financial settlement during divorce, whether an agreement is reached between the parties or the court is asked to make a decision.
You cannot simply leave an asset out because you believe your spouse should not be entitled to a share of it. Whether an asset should ultimately be included in a settlement is a separate question from whether it needs to be disclosed.
How does Form E financial disclosure work?
In financial remedy proceedings, parties will usually provide financial disclosure by completing and exchanging with the other party a Form E.
A Form E is a detailed court document where each party provides information about their finances including:
- Property
- Bank accounts
- Savings and investments
- Valuable personal possessions
- Debts and liabilities
- Pensions
- Business interests
- Income
You must both complete your Form E properly and provide documents to support the information given.
The duty to provide full and frank disclosure does not end once Forms E have been exchanged. If there is a material change in either party’s financial circumstances while proceedings are ongoing, this must also be disclosed. This could include receiving an inheritance, starting a new job, receiving a significant pay rise or taking on further borrowing.
Do you have to disclose all your assets in a divorce?
Yes. You should not deliberately hide an asset or other important financial information during financial proceedings.
This still applies where you believe the asset should not be shared with your former spouse.
For example, there may be arguments about how an inheritance, pre-marital asset or business interest should be treated as part of a settlement. However, that is different from failing to disclose that the asset exists.
We explain more about which assets may be considered in a divorce in our separate guide here.
Our expert Family Law team can help guide you through the divorce process in plain English. Get in touch on 01202 499255.
What could be considered hiding assets?
Financial non-disclosure, or “hiding assets”, can take a number of different forms.
Examples may include:
- Having secret bank accounts, savings or investments.
- Transferring assets to family members or friends in an attempt to keep them out of reach.
- Deliberately altering or falsifying financial documents.
- Deliberately giving an inaccurate or understated value for a property or valuable possession.
- Hiding a source of income.
- Failing to disclose an interest in a property, company or other asset.
Business interests can sometimes make financial disclosure more complicated, particularly where company accounts or ownership structures are involved. You can read our dedicated article on business assets in divorce here.
Pensions can also make up a significant part of the overall assets in a divorce. You can read our dedicated article on what happens to your pension in divorce here.
What should you do if you think your spouse is hiding assets?
After Forms E have been exchanged, each party and their solicitor will usually review the financial disclosure provided by the other party.
At this stage, questions can be raised about anything which appears to be missing, unclear or inconsistent.
For example, a bank statement may show transfers to an account which has not been included in the other party’s Form E. Questions can then be asked about that account and, where appropriate, further documents requested.
Questions can also be raised about assets which one party reasonably believes exist, but which have not been disclosed.
It can be difficult to prove that an asset exists if the other party has consistently denied it, particularly where there is little evidence available. However, where there are genuine concerns, there may be further steps that can be taken.
In some cases, instructing a Forensic Accountant to analyse financial records and search for discrepancies and hidden assets may be useful.
What can the court do if someone fails to disclose assets?
The court has a number of options where a party does not provide proper financial disclosure.
Order further disclosure
The court can order a party to provide further information or documents.
In some circumstances, the order may include a penal notice. This is a warning attached to a court order that failure to comply could amount to contempt of court.
Draw adverse inferences
Where there has been serious non-disclosure, the court may be able to draw reasonable conclusions from the evidence available.
For example, if money or assets cannot be properly explained, the court may take this into account when deciding what financial order is fair.
This is not simply about punishing someone for failing to disclose. The court will still need to consider the evidence and the overall circumstances of the case.
Make a costs order
The court may also order the non-disclosing party to pay some or all of the other party’s legal costs where their conduct has caused unnecessary work or expense.
Can a financial order be set aside if hidden assets are discovered later?
Non-disclosure can still be relevant after financial proceedings have finished.
If it later comes to light that one party failed to disclose important financial information, it may be possible to ask the court to set aside the original financial order.
Whether this happens will depend on the circumstances, including how significant the missing information was and whether it could have affected the order that was made.
You can read our dedicated article on when a financial agreement in divorce becomes final here.
Specialist Family Law Solicitors
If you are concerned that your spouse has not provided full financial disclosure, getting advice early can help you understand what information can reasonably be requested and what your options may be.
At Frettens, we understand that everyone's circumstances are different.
Our bright & experienced Family Team would be happy to talk to you to gain a better understanding of your situation and provide more tailored advice and support.
We offer a free initial chat with one of our family experts for all new clients. You can call us on 01202 499255 or fill out the form at the top of this page to get in touch.
Comments