How to deal with a spouse who does not provide disclosure

Before a financial settlement is negotiated, it will usually be the case that both spouses provide full financial disclosure, confirming all of their assets, liabilities, company shareholdings, income and pension provision.

It is widely accepted that complete financial transparency is often the least stressful and the least risky approach to obtaining a financial settlement during divorce at an early stage.

Fortunately, in the majority of cases, parties are honest about their financial circumstances.

However, it is not uncommon for parties engaged in financial proceedings to consider hiding assets or to try to place the assets beyond the reach of their spouse.

In those circumstances, what steps can be taken? To understand this better, we need to consider the obligation to provide financial disclosures and practical steps that can be taken if this is not followed.

Obligation to provide Financial Disclosure

It is an important principle in reaching a financial agreement during divorce that both parties provide full disclosure of their assets.

This financial transparency gives both parties a complete picture of what is at stake, making it more realistic that an amicable financial settlement can be achieved.

To achieve this, the Courts require that both parties provide full and frank disclosure of their financial arrangements spanning back at least 12 months. This is carried out by the completion of a financial statement on Form E which takes a holistic approach to all aspects of shared and individual finances which include: –

Properties – ownership of both the matrimonial home and other properties.
Businesses – an accurate valuation of any privately owned businesses will need to be disclosed if available. Disclosure of the company accounts is also necessary.
Children – information about dependent children will be included with an emphasis on any financial contribution towards their education.
Income – all earnings must be set out and verified with supporting documentation in the form of bank statements for at least the past 12 months.

Examples of attempts to hide assets

We are frequently instructed by clients who have suspicions that their spouse may be taking steps to hide or temporarily dissipate their assets. Often, these suspicions will date back to a time before the marriage had broken down.

The most common approaches include the following: –

High value purchases – buying expensive items that retain their value with the intention of recouping the money post settlement. This can include purchasing jewellery, watches or cars for a new partner.
Temporarily transferring assets to third parties such as family members in the form of money or shareholdings.
Placing assets in Trust or transferring them into complex corporate structures (if set up close to the time of the divorce then the Courts may be suspicious regarding the timing although long standing Trusts may be difficult to link with concealing assets).
Moving assets offshore.
Secret bank and savings accounts – this is especially prevalent when one party had increased financial control during their relationship.
Asking an employer to postpone a bonus or even make them redundant.
Manipulating business assets – this may include falsifying business liabilities, devaluing/hiding assets.
Cryptocurrency – this has become increasing common in recent years as the anonymity and lack of a paper trail makes this a viable option for concealing assets.

Steps to take if you think your Partner is Hiding Assets

It is very important to seek pre-emptive advice from solicitors, particularly so if your spouse has a connection to a country other than England & Wales.

In addition to taking legal advice, other preliminary steps that you should consider taking include: –

Early disclosure – Consider seeking early disclosure (before formal court proceedings have commenced) with that disclosure dating back 12 months to assist with tracing the movement of assets.
Keep quiet about your suspicions until you have taken initial legal advice to reduce the risk that your spouse will be tipped off as to your plans which may lead them to moving or dissipating assets.
Forensic Accountants – This can assist in locating and identifying your spouse’s assets and we work with specialist forensic accountants who can investigate discrepancies and inaccuracies in the disclosure provided.
Accessing confidential information – a note of caution needs to be struck here as there are very strict rules which govern the accessing and handling of another party’s confidential information. If these are carried out in the wrong way then it can damage your case. We can advise as to what information and documentation can be accessed.
Search or Freezing Orders – If you have a real concern that your partner may attempt to dissipate assets or move them beyond your reach then you can consider applying for a search of freezing order to locate the assets.
An Order for third parties to disclosure information about your spouse’s assets

What is the deterrent for hiding assets in Divorce Proceedings

It is very likely that attempts to hide assets will delay achieving a financial settlement and increase legal costs. There are a variety of sanctions available to the Court ranging from being ordered to pay court fees to being held in contempt.

The Courts can potentially apply an Add-Back which is used when individuals have spent certain monies and it can either be returned to the matrimonial pot or deemed to exist even if spent by the deceptive spouse.

Fundamentally, the discovery of concealing assets can result in a spouse receiving a worse financial settlement, especially if the Court feels that the course of conduct in the attempt to conceal is so bad that it should be taken into account.

Additionally, if the deception is discovered after a final financial order has been made then the Court has the power to reopen the original financial settlement and make variations to that final order.

Summary

If you do have suspicions that your spouse may be seeking to dissipate assets or may have already taken those steps then you should act fast and take specialist family law advice.

At Wendy Hopkins Family Law Practice we have considerable experience in dealing with situations where full financial disclosure has not been provided and we will navigate you through this by providing practical advice so that you understand the options available to you to reach a positive outcome.

T: 029 2034 2233
E: [email protected]

Author: David James

David James