Hidden assets on divorce
When trying to negotiate a financial settlement or seek the courts determination of the finances on divorce, both you and your spouse have an ongoing duty to each other and to the court, to disclose all of your assets and financial circumstances. This duty continues until proceedings have concluded. This includes disclosing any and all assets accrued before and after the marriage (though there are circumstances when these may not be considered in determining a final settlement), as well as those accrued during the marriage. Hiding assets is fraud and can be punishable by way of a fine or imprisonment.
If you have suspicions that your spouse is being dishonest or may have hidden assets in the lead up to the divorce, we can help. A Solicitor can advise you of how to prevent your spouse from attempting to or transferring, hiding, or disposing of money and assets, and can help you to achieve a fair financial settlement.
How to investigate hidden assets on divorce
The usual process for obtaining financial disclosure, is by completion and exchange of a financial statement (Form E). A Form E seeks to collate evidence of the financial circumstances of each spouse and any children of the family.
Once these are exchanged, parties can raise questionnaires about their spouses’ disclosure (including items they believe are missing) If you are not satisfied with your spouse’s replies, a schedule of deficiencies can be raised asking for further information and documents.
You do have to be careful when trying to establish what is missing. For example, you must not search for physical documents in your spouse’s belongings or try to access electronic copy documents on their electronic devices or within their emails, without their permission – even if you know their passwords. Any information that you glean by these methods is likely to be excluded by the court from the proceedings and you could risk a costs order being made against you.
If you have obtained confidential documents, belonging to your spouse, that you believe to be relevant for the proceedings, you should notify your solicitor. On some occasions they will not be able to use those documents but will need to return them to your spouse or their solicitor.
There are various things that your solicitor can do to gain access to proof of your spouse’s assets, through legitimate means
- With your spouse’s agreement, a Form of Authority can be provided to a bank or third party, with a request for copies of required documentation
- It may be possible to hire a private investigator and/or forensic accountants to discover hidden assets (if the costs are proportionate when compared to the value of the asset in question)
- Protective notices can be registered against any properties owned in your spouse’s names. In particular, if the family home if not registered in your name, you will have the right to register a Matrimonial Home Rights Notice. This will ensure that you can remain living in the property whilst the discussions/proceedings are ongoing. You will also get notice if your former spouse attempts to sell or re mortgage the property.
- They can apply to the court for an order against a third party to disclose information, for example, a bank can be asked for provide details of all accounts with them, held by a particular individual.
Forcing disclosure of assets
The court takes a dim view of deliberate non-disclosure. If you can demonstrate to the court that your spouse is concealing and misrepresenting the value of their assets, then the court has a wide range of discretionary powers:
- Your spouse can be ordered to provide specific documentation, and a penal notice can be applied to the order.
- The court can order a settlement that is less favourable to your spouse, where they are found or believed to have been dishonest.
- The court can make an order for legal costs against your spouse.
- Where non-disclosure is persistent, the dishonest party can be held in contempt of court and penalties can include fines or even a prison sentence.
What if a husband/wife is about to move or dispose of assets?
If you suspect that your spouse is about to dispose of their assets, either by moving them out of the jurisdiction or by gifting or transferring them to a third-party, an urgent application can be made to the court to prevent this action.
- The court can make search orders, or third-party orders, where it suspects that a spouse has attempted to conceal monies or assets by transferring them to another.
- The courts can order freezing injunctions to stop a spouse disposing of assets. Where the transfer is outside of the jurisdiction, it may be possible to obtain a mirror order in the relevant foreign country.
Sometimes, it is not proportionate to apply to the court for these orders, due to the value of other assets which are available. However, if your spouse has transferred, hidden or disposed of money or assets, the court can ‘add-back’ the value of these for consideration when making a final order.
What about assets which may be jointly owned by spouse with 3rd parties, in corporate structures or in the name of a third party?
If your spouse has a share in assets that are owned with a third party, the value will usually be taken into account. However, the court may view the value differently, depending on whether the asset is one that can easily be sold, or realistically cannot be sold because of the way it is owned. The courts will also include the value of some assets in corporate structures. Again, this will depend on how accessible the funds are, whether they are required for continuing the business and whether the money can easily be released form the corporate entity. People are required to provide this information to the court or in discussions with you regarding financial matters.
The risks of a “fishing expedition”
Whilst the court can make several orders regarding assets that have not been disclosed, they will not make an order unless they believe that there is a real likelihood of further assets being in existence, in other words, they will not allow a fishing expedition, just to see what there might be.
Whilst any dishonesty is frustrating, it is important to remain pragmatic. The measures available to investigate dishonesty can be costly. Our solicitors would be happy to advise you of whether an investigation will be worthwhile.
It should be noted that if information comes to light, after finances have been resolved, it is possible for the matter to be re opened. This would depend on the new situation and likely difference that that would have made to the outcome overall. Our solicitors can advise you, whether this would be applicable to your personal situation.