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
It might be surprising to learn that, when it comes to divorce and division of assets such as property and businesses, there isn’t a simple formula that ensures spouses receive a fair share. In England and Wales, the courts won’t impose an even split. Instead, they consider factors like child welfare and financial needs to reach a fair outcome.
Therefore, the first step in divorce and division of assets should be to determine what possessions fall into the matrimonial pot. With this established it should, in theory, be easier for the courts to ensure that all parties receive a settlement that accurately reflects their entitlement.
The issue with this process is that it depends entirely on both parties being upfront and transparent about full financial disclosure. Despite the potential penalties for spouses who conceal assets, some will transfer or sell possessions in order to exclude them from the matrimonial pot. Disposing of assets before divorce is just one way that they might try to do this.
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 Before Divorce
There are ways to stop a former spouse from disposing of assets before divorce. These range from injunctions to imposing strict limits on their access to large sums of shared money. However, it’s important that your suspicions are based on provable behaviour and not unfounded concerns.
Under Section 37 of the Matrimonial Causes Act you can make an application to stop your spouse selling assets before divorce. If the courts find your concerns to be credible, there are a few measures they could take — the most common being a Freezing Order. This injunction removes the ability to control what happens to any assets during the divorce process. Alternatively, the courts could compel your former partner to pay money to the court, or to their solicitor, thereby limiting their access to large pools of ‘shared’ money.
Your spouse may not be made aware of the application until the order has been made, but they will get an opportunity to defend themselves. This is important because, if you are seen to have acted hastily — or without any real foundation — you could end up having to pay their legal costs. Therefore, it’s crucial that your beliefs are based on more than just a feeling of suspicion.
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.
Lowry Legal: An Authority on Divorce and Division of Assets
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.
