What happens when finances are hidden on divorce?

Upon divorce, ex-spouses will either reach an agreement on how to split their assets between one another or alternatively they will have an order imposed on them by the Court  Either process relies on there being a process of full and frank financial disclosure.  This requires the parties to be open and honest about their financial position.  This is where the problems sometimes start.  Unfortunately, in some cases spouses may fail to disclose assets in a deliberate attempt to prevent them from being split with their ex-partner once the marriage has come to an end.

This blog explores how assets may be hidden and what parties can do to ensure that they obtain full and frank disclosure in financial remedy proceedings.

 

Disappearing Assets

 

Sometimes, assets can ‘disappear’ upon divorce, and parties may attempt to conceal their true financial picture through one of the following measures:

• Setting up trusts
• Moving money offshore
• Giving/ transferring assets to family members and friends to hold on to
• Denying that an asset exists
• Downplaying the parties’ lifestyle during the marriage
• Omitting income when reporting to the HMRC
• Undervaluing business interests
• Winding down one business and starting another
• Using cryptocurrencies

 

Financial Disclosure upon Divorce

 

Being satisfied that there is no possibility that assets have been hidden in the divorce process ensures that both parties are treated fairly when it comes to the division of assets at the end of the marriage. Parties must therefore be satisfied that each spouse has provided full, frank, and clear financial disclosure. This may mean that various questionnaires, schedules of deficiencies and applications for penal notices may have to be used to seek clarity.  Sarah Power, Head of the Family Law Team at Chadwick Lawrence says  “Ensuring that you have received full financial disclosure and chasing down assets can be a costly process but clients should be reassured that failure to provide disclosure is taken very seriously by the Courts, and those guilty of such behaviour can be sanctioned by having an existing financial order set aside if this has been reached without full disclosure and as well as costs orders.  In some extreme cases a spouse can be committed to prison for breaching a court order requiring them to give disclosure or even criminal proceedings against them for fraud.”

When to be concerned

 

Parties to the divorce may be wise to suspect that something is amiss if one spouse starts to become more controlling or vague about their finances or assets when this has not previously been the case. ‘Generous’ offers without willingness to follow the traditional financial remedy process can also be symptomatic of a spouse hiding something, though of course this is not always the case. If one party is concerned that the other is concealing their assets, a loss of trust will quickly follow, which leads to increased acrimony between parties and, often a lengthier and more costly process.

 

It is important that anyone separating seeks advice early on from an experienced family lawyer.  The lawyers in our Family Law team at Chadwick Lawrence are well-versed in dealing with complex financial remedy cases and have experience in cases where there is an attempt to hide assets. Our team can advise on the necessary steps to be taken to ensure that any hidden assets are identified and fully accounted for.

 

The involvement of forensic accountants

 

Forensic accountants may also need to be drawn into the process to investigate any anomalies in either personal or business finances. These professionals are able to offer comprehensive investigations into matrimonial finances and can help to quickly determine if there is any merit in a client- or solicitor’s- suspicions, and are invaluable in ensuring that clients gain a true picture of the overall finances in their case, and ultimately, receive a fair portion of the matrimonial pot.

 

Contact us

 

If you have any questions about the issues raised above, or need some specific advice about finances in divorce, get in touch with one of our dedicated Family team to discuss your situation and find out more about where you stand family@chadlaw.co.uk