Halloween is traditionally a time for ghosts, disguises and things that go bump in the night. But when it comes to divorce, some of the biggest surprises have nothing to do with haunted houses. They can be hidden bank accounts, undisclosed investments or assets that seem to have mysteriously disappeared. When a marriage ends, emotions can run high, particularly where money is concerned. Understandably, nobody wants to feel that they are losing everything they have worked hard for, and the temptation to keep certain assets out of the picture can sometimes be difficult to resist. However, attempting to conceal wealth during divorce proceedings is rarely a good idea, and the consequences can return to haunt you long after the divorce has been finalised.
No Tricks When It Comes to Financial Disclosure
In England and Wales, both parties are required to provide full, frank and accurate disclosure of their financial circumstances when resolving financial claims on divorce. This means being open about assets, income, pensions, property, investments, business interests and liabilities, regardless of whose name they are held in or whether one person believes the other should have any entitlement to them.
Financial disclosure is commonly provided through a document known as Form E, supported by bank statements and other relevant financial records. The obligation is ongoing, meaning that material changes in circumstances must also be disclosed before a final financial order is made. It is worth remembering that disclosing an asset does not automatically mean it will be divided equally, or even shared at all. There may be perfectly legitimate arguments about whether inherited wealth, assets owned before the marriage or certain business interests should be treated differently. However, those arguments need to be made openly, rather than by simply leaving the assets out of the financial picture.
What Happens When Assets Go Missing?
Sometimes discrepancies arise because one person has not fully understood what information they need to provide. In other cases, the omission may be deliberate, particularly where there are substantial business interests, complicated financial arrangements or assets held overseas. Warning signs might include unexplained transfers between accounts, unusual withdrawals, changes in the apparent value of a business or a lifestyle that seems inconsistent with the income being declared. Of course, none of these automatically establishes dishonesty, and there may be entirely reasonable explanations. However, where the information provided does not appear to tell the whole story, it is important that proper questions are asked before any financial agreement is reached. The court has powers to require further disclosure and, in appropriate circumstances, may draw adverse inferences where a party fails to provide a reliable account of their finances. A failure to comply with disclosure obligations can also have costs consequences, potentially leaving the person responsible for the non-disclosure paying some of the other party’s legal costs.
Can a Financial Settlement Be Reopened?
One of the most important lessons is that obtaining a financial settlement does not necessarily mean that undisclosed assets or dishonest financial information are safely hidden away.
In Sharland v Sharland [2015] UKSC 60, the Supreme Court considered a settlement reached after the husband had deliberately misled the court about plans for a possible stock market flotation of his company. His dishonesty had affected the valuation of the business and the basis upon which the wife had agreed to settle. The Supreme Court ruled that the agreed financial order, which had not yet been sealed, should not be finalised and that the wife’s financial claims could be reconsidered.
Similarly, in Gohil v Gohil [2015] UKSC 61, the Supreme Court upheld the setting aside of part of a financial order made in 2004 after the husband had failed to disclose his true financial resources. Significantly, the wife had agreed to the original settlement despite expressing concerns about his disclosure, but this did not prevent her from subsequently challenging the order.
These cases demonstrate that dishonesty about financial circumstances can have serious consequences, even where an agreement has already been reached. Although not every omission will justify reopening a financial settlement, fraudulent or material non-disclosure may provide grounds for a successful challenge, potentially resulting in further proceedings, substantial legal costs and a very different financial outcome.
What If You Suspect Your Former Partner Is Hiding Money?
If something does not seem right about your former partner’s financial disclosure, it is important not to ignore those concerns or feel pressured into agreeing a settlement simply to bring matters to an end. Equally, suspicion alone is not proof of wrongdoing, and allegations should be approached carefully. An experienced family solicitor can review the financial information provided, identify inconsistencies and raise appropriate questions or requests for further documentation. Where necessary, specialist forensic accountants or business valuation experts may also assist in understanding more complicated financial arrangements, particularly where companies, trusts or overseas assets are involved. Taking advice at an early stage can be particularly important, as it is generally preferable to resolve questions about financial disclosure before an agreement is finalised rather than face the uncertainty and expense of trying to challenge it afterwards.
Honesty Really Is the Best Policy
Divorce can be difficult enough without the added uncertainty of wondering whether the other person is being honest about their finances. Ultimately, financial settlements should be based upon a proper understanding of the resources available, allowing both parties to make informed decisions about their futures.
At Just Family Law, our specialist family solicitors have extensive experience dealing with financial disclosure, complex assets, business interests and disputes concerning hidden wealth. Whether you are concerned that your former partner has not provided the full financial picture, or simply want to ensure that your own disclosure is accurate and complete, we can help you understand your obligations and protect your position.
This Halloween, leave the tricks to the trick-or-treaters. When it comes to divorce, honesty is far less frightening than the consequences of being caught hiding something.
Concerned About Financial Disclosure?
If you are going through divorce proceedings and have concerns about financial disclosure or the fairness of a proposed settlement, contact Just Family Law on 01962 217640 to arrange a discussion with one of our specialist family solicitors.
By Emma Sanders | Just Family Law