Financial Non-Disclosure in Divorce

Financial disclosure is the most necessary part of a divorce, and not always the easiest; disclosure helps pull together a full picture of the marital asset base, which may be better known by one spouse than the other. Disclosure also enables lawyers and financial advisors to provide the fullest and most detailed advice to clients about how the assets can be shared fairly to move life forward. Fully understanding assets and liabilities allows nuanced and tailored advice for future financial planning. Each spouse should be able to make, and should only make, informed decisions.

What Is Full and Frank Financial Disclosure?

Financial disclosure is required to be ‘full and frank’. A comprehensive document known as a Form E is often used in voluntary negotiations, mediations and always in court process. Although lengthy, the form acts as a helpful prompt to think about what assets might exist that have been overlooked (ie. old premium bonds or shares etc). The front page of the Form E explains that failing to make full and proper disclosure can be punishable as contempt of court by fine or imprisonment. Every Form E concludes with a statement of truth, and so reminders to be honest and transparent are present at the start and end of the form.

Common Tactics Used to Hide Assets in Divorce

Unfortunately, the requirement for honesty continues to be widely interpreted by those unwilling to take it literally. Despite the court being focused on fairness, differing versions of ‘fair’ mean that some individuals will only accept an outcome that suits them. They will therefore massage the edges of disclosure, and sometimes lie outright, to produce their ‘fair’ outcome. It is always surprising that people think they are the first to try and hide assets or liabilities. What few realise is that with the extensive use of plastic rather than cash, bank and credit card statements often tell a full and colourful story of expenditure with transfer and money trails clear to see.

Technology, Document Fraud and Verification

As tech improves, so too the opportunities for faking documents – either by subtle amendment or omission. If something looks wrong, it probably is. Internet searching to double-check names and places can often help with verification or fact-checking. The benefit of the internet is that the majority of people use it, and the internet records and stores events in real time forever, making track-covering increasingly difficult. What someone claims in disclosure may easily be discredited with an internet post made some years previously when they were not trying to be sneaky. Another helpful tool is third party verification. Professionals have their own obligations and few, in the end, are going to compromise their reputation and career for the sake of another’s divorce.

Costs Orders are rare in financial litigation cases, but if made they invariably reflect litigation misconduct. That is, obfuscation, failure to file financial documents on time, failure to attend court, and fraud. Often costs Orders are ‘wasted costs’ Orders, ie, the spouse chasing for information is having their legal costs wasted unnecessarily directly reflective of the litigation conduct of the other spouse. As costs Orders are usually paid from assets, all that is achieved is precisely what the errant spouse strived to avoid, only more expensive.

The consequences of financial Orders can be avoided for genuine mistake or fraud, but not for failing to check the facts. If a person chooses not to do financial disclosure and finds out afterwards that their other half has won the lottery and not told them, they may only have themselves to blame. The consequences of dishonest, avoidant and fraudulent conduct in divorces can be far reaching, long-lasting and rarely, truly, pay off. Co-parenting with someone determined to be dishonest is challenging at best and leaves a bitter taste from which it can be difficult to protect children. Proceedings are invariably unnecessarily drawn out increasing expense for all involved. Any opportunity to divorce with courtesy and dignity is lost. It is far better to be open and honest and take measured and sensible advice to divorce well.  Mediation, working round table, or having enough trust between you to sit around a kitchen table and work together is, in the long run, far more beneficial for spouses as individuals and co-parents than misguided attempts to be clever. 

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Prettys’ Family Team are multi-skilled in their approaches to family matters.  The team consists of trained mediators, collaborative lawyers with years of experience in round table working, and experienced litigators.  We have a thriving mediation practice and are creative and tailored in our approach to finding resolution.  You can contact Georgina Rayment in confidence, and for more information on the services our practice offers you click here to find out more.