Disposing of assets before divorce is a proven tactic for spouses who want to deny their other half a fair financial outcome. Although there are severe penalties in place for anyone who refuses full financial disclosure, this deterrent doesn’t always work. In fact, a recent survey revealed that one in four partners have concealed their true wealth to try to get a better settlement over the last ten years.
Anyone going through separation, should understand that you’ll only obtain a fair share if you know precisely how much is at stake. Therefore, if you believe that your former spouse is taking steps to dispose of assets, a timely intervention is required. But how can you spot this kind of behaviour and — once established — what can you do to tackle it? Our blog will discuss how to combat the disposing of assets before divorce, as well as what options are left if it’s too late, and more.
Divorce and Division of Assets Explained
When facing a divorce, understanding division of assets is crucial. Courts don’t guarantee an equal split; instead, they consider financial needs, child welfare, and what’s included in the matrimonial pot. Issues like disposing of assets before divorce or selling assets before divorce can complicate matters, making legal guidance essential.
- Divorce and division of assets doesn’t follow a set formula; courts in England and Wales consider factors like financial needs and child welfare rather than imposing an automatic 50/50 split.
- The first step is identifying which possessions are part of the matrimonial pot, making it easier to reach a fair settlement.
- Full financial disclosure from both parties is essential. Some people attempt to dispose of — or sell — assets before the separation is complete, a practice known as dissipation of assets during divorce. The intention here is to reduce what is considered marital property — to deny someone a fair share of the overall pot.
If you are concerned about the implications of divorce and division of assets, legal advice is a necessity. A family law specialist can shed light on your circumstances, while also stopping you from starting an investigation that could lead to you breaking the law.
Spotting Potential Dissipation of Assets in Divorce
When looking for signs that someone is disposing of assets before divorce, it’s important to focus on unusual spending patterns and not increased living expenses. Signs of dissipation of assets during divorce often include excessive gifting, purchasing, and cash withdrawals. You might even notice sudden changes in behaviour, such as a new gambling habit, or increased overseas travel.
The typical signals you should keep an eye out for include:
- Out-of-the-Ordinary Spending: Unusually lavish purchases can be a sign of dissipation of assets during divorce.
- Exorbitant Gifting: Giving extremely valuable items to close friends and family could be an attempt to exclude them from the matrimonial pot.
- Sudden Property Sales: Some spouses might choose to sell domestic and/or overseas property below market value, as cash is often more difficult to trace than brick and mortar assets.
- Withdrawals of Savings: Spending savings — with the intention of either concealing it or transferring funds into other accounts or investments — can be a telltale sign that a partner is disposing of assets before divorce.
- Out of Character Spending Sprees: A sudden inclination for extravagant spending — such as shopping trips, luxury holidays, or inexplicable business expenses — can be a warning sign.
- Gambling: There are a few reasons why a spouse could suddenly turn to gambling, and not all of them relate to disposing of assets before divorce. In some cases it might be a release from the anxiety of the separation process. However, if gambling activity appears out of nowhere — and large sums are involved — it could be a result of an attempt to hide substantial wins and/or shrink the matrimonial pot.
It’s worth reiterating that out of character behaviour is the main thing to look out for. At no point should you investigate this yourself or challenge anyone over a suspicion that cannot be proved. Your solicitor may instead bring in third party experts, such as forensic accountants, to get to the bottom of any suspected financial wrongdoing.
How to Combat the Selling of Assets During Divorce Proceedings
You can prevent a spouse from disposing of assets before divorce by taking legal action under Section 37 of the Matrimonial Causes Act, including applying for a Freezing Order or limiting their access to shared funds.
- Use Court Injunctions: You can apply under Section 37 of the Matrimonial Causes Act to stop your spouse from selling or transferring assets.
- Freezing Orders: The court may issue a Freezing Order, preventing your spouse from controlling or disposing of assets during the divorce.
- Restrict Access to Funds: Courts can require your spouse to pay money into court or to their solicitor, limiting access to large sums of shared funds.
- Evidence Matters: Your concerns must be based on provable behaviour, not just suspicion. Acting without evidence could result in being forced to pay your spouse’s legal costs.
- Opportunity to Defend: Your spouse will get a chance to respond once the order is made, ensuring the process is fair.
Taking action with solid evidence helps protect your assets and prevents attempts at selling assets before divorce from undermining a fair settlement.
What to Do if Dissipation of Assets Has Already Happened
Even if you think that your former spouse has managed to dispose of assets before your divorce was finalised, it might not be too late to secure your fair share. If proven, the courts can recover ‘missing’ items, or include their monetary value in a revised settlement. Alternatively, if other assets can be used to offset the disposal they may include these to establish a more favourable settlement for the applicant.
Also, the court has the power, in certain circumstances, to reverse the disposal of assets, like share transfers or the transfer of property.
FAQs: Divorce and Division of Assets
- Will the money I transfer to family members before divorce be considered by the court?
Yes. Courts may view transfers to family or friends as attempts at disposing of assets before divorce. These transfers could be heavily scrutinised and may still be included in the matrimonial pot — if they believe the intention was to reduce your former spouse’s entitlement. - What’s the best way to spend money before or during a divorce?
All spending should be reasonable and documented. Large or unusual expenditures may be considered an attempt to dissipate assets. Always consult a family law specialist to avoid actions that could harm your claim down the line. - Can you withdraw money from a joint account before divorce?
Technically yes, but withdrawing significant sums without the other party’s consent would be viewed very negatively. Courts may even choose to adjust settlements if they believe that funds were removed solely to reduce marital property. - Is there a penalty for hiding assets?
Yes. Concealing assets can lead to serious legal consequences, including court sanctions and adjustments to the division of property. Full financial disclosure isn’t just critical during divorce and division of assets — it’s a legal requirement. You can read more about this in our dedicated blog. - What is a good faith transfer?
A good faith transfer is a legitimate transfer of money or property for fair value, which is not intended to deprive the other spouse of their share. Courts distinguish these from other, improper attempts to hide or move assets. - How do solicitors find hidden assets?
Family law solicitors may investigate bank statements, tax records, property ownership, business accounts, and other financial documents that have been disclosed correctly. They can also use discovery processes to uncover dissipation of assets during divorce by instructing forensic accountants, for example. - Can you get divorced without sorting out finances?
Technically yes, but it’s very risky, especially if you have a high net worth. Not making financial arrangements can create significant long-term legal complications — especially if one of the spouses dies.
Divorce and Division of Assets, Simplified by Lowry Legal
For anyone who is concerned about a spouse selling assets before divorce, it’s vital to seek experienced legal representation. Working with a family law solicitor will help you to get to the bottom of what is at stake, while also outlining the steps you can take to obtain your fair share. Crucially, it can also ensure that you don’t attempt anything that could undermine your position, or land you in legal trouble of your own making.
Lowry Legal has become established as a leading law firm for divorcing couples who share significant wealth. This makes us perfectly positioned to offer astute guidance around high value assets like businesses, overseas property, investments, savings, and beyond. We excel at understanding your biggest challenges and goals, and creating a strategy that works in your best interests.
We understand that divorce and division of assets is a complex area of law that can be challenging. That’s why we avoid jargon and focus instead on delivering results as quickly and calmly as possible. A Legal 500 firm, you can rely on us to simplify the process and guide you towards a profitable future.
To speak to a member of the Lowry Legal team about how we can be of assistance, make an enquiry today.
