Hidden assets on divorce – legal tools and consequences

7th March 2023

I regularly speak to clients who suspect their former partner is not being entirely honest about their financial position and want to know how they can achieve more clarity in their divorce proceedings.

When a marriage or civil partnership has come to an end, the couple’s assets must then be fairly distributed between them.

But to decide what a reasonable division of the finances would be, it is necessary to have a clear view of each party’s financial circumstances.

In an ideal world both parties would be open about what they each hold, to allow a swift and amicable division of finances.

However, sadly, this is not always possible.

Am I obliged to disclose all my assets?

In negotiations following separation, each party owes a duty to the court to provide full and frank disclosure of their financial situation on an ongoing basis. This includes disclosing income, cash, savings, investments, properties, assets and debt, and also potential changes e.g. sales of businesses and employment offers. Without full disclosure neither the parties nor the court can make an informed decision on what a fair distribution would be.

This disclosure is provided, initially, in a standard form (Form E) where each party provides details of all relevant finances, backed up by supporting documents such as bank statements and tax returns, and signed with a ‘statement of truth’ to the court.

However, given the reluctance of some spouses to be fully open even during the good times, it is not surprising that when a marriage has broken down, this duty to court may not always be sufficiently compelling to extract the full picture.

What can I do to uncover hidden assets?

Where there are concerns that a spouse is not being open in their financial disclosure, we can take various steps to uncover hidden assets including:

A forensic review of documents already provided (i.e bank statements) to uncover further finances such as payments to undisclosed accounts or third parties. An experienced family lawyer will know the sorts of transactions to look out for and the questions to ask;

An application for a court order obliging the other party to provide specific documents (this can be supported by a penal notice which can result in imprisonment should the party fail to comply);

A court order for third party disclosure (e.g. a bank, or someone else who has access to important information or documents) is also possible where the spouse continues to refuse or claims they do not have access to certain information;

In exceptional circumstances a search order can be made allowing a person to enter a premises to search for and remove documents;

If the spouse may be disposing of or moving assets in an attempt to hide or put them out of reach, it is possible that a freezing order can be made (for example to freeze a bank account so it cannot be used).

Whilst it might be tempting to try to uncover hidden assets yourself, this is a hornet’s nest and you should speak with your lawyer before considering this way forward.

What is the risk if I do not disclose my assets?

If a party fails to provide a full picture of their financial circumstances, there might be a number of consequences:

The court can draw adverse inferences against the non-disclosing party, for example by making an assumption that the non-discloser has more money than presented, which can lead to them receiving a lower proportion of the disclosed assets;

The non-discloser could be ordered to pay a portion of the other’s legal costs;

If the non-discloser provides relevant information to their solicitor but forbids their solicitor from disclosing it, the solicitor would have to stop acting for that client;

In extreme cases the non-discloser could be found guilty of contempt of court, if it is shown that they have lied to the court or failed to provide information, which can be punishable by imprisonment;

The entire divorce settlement can potentially be reopened years down the line on the grounds of material non-disclosure if information comes to light that was not disclosed during the divorce proceedings.

Whilst it is hoped in each case that none of the above will be necessary, in my experience further questioning and/or court orders can be necessary in some instances to obtain a more accurate picture of the family finances.

If you feel your spouse is not being fully open about their finances in divorce proceedings, or material non-disclosure has come to light since your divorce, we can help. It is strongly recommended that you seek legal advice at an early stage and certainly before reaching a final agreement.

If you would like to discuss this further, please feel free to contact me: Rhiannon.guibert@smb.london