Divorce can be a challenging process, especially when trust has broken down. In some cases, one party may attempt to hide, transfer, or dissipate assets to stop them being included in the financial settlement. A freezing injunction — also known as a Mareva injunction or freezing order — is a legal tool designed to swiftly stop these actions and preserve assets until the court can decide on a fair division.
But how does this process work, and what steps are involved in obtaining one? In this article, we’ll explore the purpose and scope of freezing injunctions, how to identify the warning signs of asset dissipation, and what types of assets can be frozen. We’ll also discuss its pros and cons, to help you decide if it’s the right move for your situation.
What is a Freezing Injunction?
A freezing injunction is a form of court order that stops one party from disposing of, or transferring, their assets during divorce proceedings. They are commonly used by spouses who are concerned that their former partner is impeding a fair settlement by selling, loaning, or temporarily gifting valuable assets, thereby hindering the courts’ request for full financial disclosure.
Freezing injunctions are more likely to be used when there is significant conflict at the end of a relationship. While an injunction to freeze assets can be instigated by any spouse with valid grounds, they are generally more common when one party brought more wealth into the relationship at the beginning — and has maintained a high level of financial control ever since. Greater financial oversight, combined with heightened emotions, can sometimes lead former partners to try to conceal the extent of their wealth, despite severe legal consequences which range from a reduced settlement to a criminal conviction.
If you are considering freezing assets in a divorce, it’s vital that you have more than just a suspicion of wrongdoing. Although you are discouraged from taking any actions that could lead to legal troubles, such as breaching data privacy laws, there are some telltale signs that could benefit your case.
These include:
- Assets are being transferred overseas.
- Property is being sold.
- Properties are being remortgaged.
- Savings have diminished — often in a short timescale.
- Assets have been transferred to a third party, i.e. a friend or relative.
- Money has suddenly been tied up in a trust.
If you notice anything of this nature, it’s crucial to obtain guidance from an established family lawyer before taking action. They will discuss your case in detail before formulating the ideal strategy to move forward.
Which Assets Can be Frozen?
If there is enough evidence of wrongdoing, any asset can be frozen by the courts. Examples range from conventional possessions, such as current accounts and savings, to more complex resources, like shares and business assets. In some cases, an injunction to freeze assets might even include something that will be received in the future, such as an inheritance windfall.
In high net worth divorces, freezing injunctions can be used to stop the following items being concealed:
- Bank Accounts: Joint, personal, and business accounts can be frozen to stop funds from being moved or withdrawn before a financial settlement has been decided.
- Properties: Both residential and commercial properties can be included in an order.
- Investments: Stocks, bonds, and pensions can be part of an injunction to freeze assets.
- Business Assets: A spouse can be prohibited from selling shares, intellectual property (I.P.), and company equipment until divorce is finalised.
- Valuables: High-value assets, such as jewellery, vehicles, and artwork can also be frozen.
In many cases, the courts will impose an injunction to freeze certain specific assets. However, in extreme circumstances, they actually have the power to freeze all possessions.
How to Obtain an Injunction to Freeze Assets
If you suspect your spouse is concealing assets during divorce proceedings, a freezing injunction can safeguard those assets. It’s important to act quickly and consult with a solicitor, to give yourself a better chance of securing a positive outcome. In many cases, a temporary freezing order may be used to slow things down until a full hearing can be arranged.
The following steps will need to be taken when considering freezing assets in a divorce:
- Act decisively to gather detailed information on at-risk assets (including their value, location, and any evidence you have that could indicate dissipation).
- Consult with a solicitor to explain your case and discuss the options available to you.
- Apply for the freezing injunction without notifying your ex-partner and submit any evidence you’ve gathered (legally) to the courts.
- The courts will consider the risk of dissipation and whether damage to you outweighs that of your spouse.
- A temporary injunction may be granted for a limited time until both parties can present their case in a full hearing.
- Finally, the court will evaluate your former partner’s conduct and the evidence provided, before deciding whether to extend or lift the injunction.
Understanding the process of obtaining a freezing injunction is essential, but it’s also important to first weigh up the pros and cons. This will help you to decide if it’s the right course of action for your circumstances.
The Pros and Cons of Freezing Assets in a Divorce
Freezing assets in a divorce can protect matrimonial wealth and ensure a fair settlement — but it’s a serious legal step that must be handled extremely carefully. While it can prevent one party from hiding or dissipating assets, the process comes with potential risks. Understanding the key advantages and drawbacks will help you to decide if it’s a suitable strategy.
Pros
As we’ve established, the key purpose of an injunction to freeze assets is to stop them being hidden, disposed of, or transferred — with the end goal of achieving a more transparent separation. However, this versatile legal mechanism can also put you in a better position to negotiate.
The main advantages include:
- Stops Asset Dissipation: It prevents your ex-partner from transferring or selling assets to avoid sharing them fairly as part of divorce settlement.
- More Transparent: Because a freezing order minimises the chances of finances being concealed, it allows both spouses to get a clear understanding of what is really at stake.
- Adaptable: The order can be used across all types of assets, including bank accounts, properties, shares, and even international assets like property and business interests.
- Quick Relief: When there is an urgent risk of dissipation, a freezing order can be granted in a relatively short timescale.
- Helps Negotiations: The pressure applied by this kind of injunction can force the other party to act in good faith and negotiate fairly.
Cons
While freezing assets can protect marital wealth and ensure a fair divorce settlement, it’s not without its challenges. The process can be costly, escalate conflict, and disrupt legitimate financial activities. Before pursuing a freezing injunction, it’s important to consider the potential downsides alongside the benefits in advance.
The main disadvantages include:
- Additional Costs: Applying for/defending a freezing order can be expensive — especially in more complex cases.
- Can Be Misused: If an injunction is granted without sufficient evidence, it could be seen as an overreach or unfair.
- Disruption: Freezing orders can impact legitimate business operations and/or limit access to funds needed for living or legal expenses.
- Scope for Conflict: Applying for an injunction to freeze assets can be interpreted as a hostile move — which can make later negotiations more challenging.
- Financial Liabilities: If your freezing order is proven to be unfounded, you might need to cover any monetary losses caused as a result.
Why Freezing Injunctions Matter – and How Lowry Legal Can Help
Freezing injunctions are an essential legal tool for safeguarding assets during divorce proceedings, particularly in high-stakes cases where trust has broken down, and the risk of dissipation is high. By preventing the concealment or transfer of assets, these orders can ensure that both parties have a good chance of achieving a fair settlement. However, their complexity and potential consequences mean they should always be approached carefully and with expert guidance.
At Lowry Legal, we understand the unique challenges that come with high-net-worth divorces and disputes involving complex financial arrangements. Our experienced team specialises in securing freezing injunctions and navigating the intricate legal processes involved, ensuring your interests are protected every step of the way. With a reputation for getting results and a tailored approach to every case, Lowry Legal is perfectly placed to support you in achieving the best possible outcome.
Contact us today to discuss how we can help you.
