On the breakdown of a marriage, it is not uncommon for the wealthier spouse to seek to hide their assets in an effort to try to defeat any claim on divorce. However, any party who tries to conceal their financial worth can expect the court to flex its’ judicial muscles, when this comes to light.
Below we look at the importance of disclosure during financial remedy proceedings and what steps can be taken by the court in favour of the financially weaker spouse to deal with underhand tactics.
What are the rules relating to disclosure on divorce?
When a marriage irretrievably breaks down, and the division of martial assets cannot be agreed, the court may need to make an order. To do this, and to do so fairly in all the circumstances, the parties will be required to provide the court with what is known as ‘financial disclosure’. This is the process whereby both parties to a marriage are ordered to disclose details of their income, property and assets. This should include assets held jointly and individually. It should also include assets acquired prior to, during and even after the marriage has ended. In this way, the court can assess the parties’ respective economic needs, obligations and responsibilities in the context of their financial worth on divorce.
In some cases, there may be assets that one spouse knows nothing about. Still, even if one party has no knowledge that a particular asset exists, this must be disclosed to the court. This is because the parties are legally required to provide full and frank disclosure of their entire financial circumstances.
What are the consequences of non-disclosure on divorce?
There are various ways in which a financially stronger spouse may attempt to defeat or reduce a claim made against them on divorce. These can include converting assets into cash, temporarily transferring assets to family members, placing assets into sham trust mechanisms and moving assets offshore. However, whilst attempts to deploy these kinds of tactics can occasionally be pulled off, the courts have wide-ranging powers when it comes to dealing with anyone who is not playing fair. These include:
Assessing an award based on the inferred wealth of a party, even if assets can no longer be located
Notionally ‘adding back’ an asset to the matrimonial pot, as if the asset transfer had not taken place
Varying or reversing the transfer of assets into a trust or other corporate structure
Awarding a larger proportion of English-based assets in recognition that these are easier to locate.
The courts can also revisit an order once made, setting this aside and ordering a party to pay any legal costs arising from resolving issues about previously undisclosed assets. More importantly, if a party is found by the court to have deliberately hidden assets, they could be potentially prosecuted for fraud.
If you know or suspect that your former spouse is seeking to hide or dissipate assets on divorce, expert legal advice should be sought immediately to help protect your position financially.
Legal disclaimer
The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, either express or implied, is given as to its’ accuracy, and no liability is accepted for any errors or omissions. Before acting on any of the information contained herein, expert advice should be sought.
