During a divorce, there are many circumstances when those involved will be required to financially disclose their assets. Financial disclosure is a full statement of your current financial earnings and any assets, along with supporting documents, which act as proof. We look at the definition of financial disclosure, what it comprises and how important it is — along with the consequences of attempting to disguise your financial position.
What Does Financial Disclosure Involve?
While many divorces are resolved amicably, in other cases, a divorce settlement can be a long, drawn-out and bitter battle. When significant assets are at play, for example, large inheritances, trust funds or complex investments, a divorcee may feel defensive and want to protect them — it can feel unjust if an individual has worked to grow a successful business, for example, only for their ex-partner to be entitled to a share.
In any divorce case involving the sharing of finance and assets, the court can determine how these assets should be shared — and if they should be shared at all.
For the court to be able to make a fair assessment, financial disclosure is required.
It’s important to note that financial disclosure can be done voluntarily. In this case, your divorce solicitor can help negotiate a settlement involving the division of assets. Such agreements can be made legally binding with a Consent Order.
Financial disclosure, then, must include all assets — even non-matrimonial assets not considered part of the “joint pot”. This might include property (excluding the family home and in an individual’s sole name).
All assets must also be backed up with relevant documentation, which might include:
- Mortgage statements
- Valuations of properties
- Wage slips/tax returns
- Bank statements (both personal and business)
- Pension slips
- Records of any savings or investments (e.g. ISAs)
- Insurance policies
- Evidence of inheritance (both previous and pending)
The Consequences of Not Financially Disclosing Assets
Attempting to hide assets can be tempting, but it will only serve to drag out divorce proceedings — resulting in an expensive and seemingly neverending court case. The court also has far-reaching powers to investigate any cases of non-disclosure. In the worst-case scenario, you may be found in contempt of court, which carries a potential custodial sentence.
One recent case (LFL vs LSL, 2017) acts as a cautionary tale in terms of not fully disclosing assets.
In this case, the husband showed a disregard for the entire process, failing to complete a Form E — a legal form both parties use to disclose their assets — or provide any supporting evidence. After many abortive hearings and second chances, the Judge presiding over the case required the husband to fill in Form E during the trial. The result was an “indecipherable” form, followed by a second “indecipherable” voluntary submission. Neither forms disclosed two businesses he had been operating illegally.
The Judge made a clear statement of guidance: that the court was not to make assumptions about the vastness of any hidden assets but that it should “be concerned to see that the inferences to be drawn do not result in a too conservative estimate”. As a result, the Judge determined that the husband could cater for his own needs — due to his ability to cope following the separation — and awarded the wife more than 50% of his assets, along with requiring the husband to pay the wife’s costs of the divorce proceedings — totalling a significant £21,285 — in a case where the assets in dispute were fairly modest.
This demonstrates the importance of full financial disclosure. If you are concerned your ex-partner may be attempting to disguise assets, its crucial to consult a divorce solicitor.
Whether you have numerous assets or you feel you may be entitled to your ex-partner’s assets, financial disclosure will be necessary. This makes it vital to consult an experienced divorce and financial arrangements solicitor. Contact us today to discuss your case.