Reaching a financial agreement that seems fair and balanced for all parties is often one of the most contentious areas of the divorce process.
While it might be tempting to feel that full and frank disclosure could put your highest value assets at risk, opting for transparency is almost always the key to a more effective separation process. In fact it is mandatory. This is especially true of full financial disclosure in divorce cases where there is significant wealth, as monetary openness can go a long way towards laying the foundations for trust between the parties and an eventual settlement.
Let’s take a look, then, at the often tricky subject of financial disclosure and non-disclosure of assets in divorce, the processes involved, and why it could be a major step towards a timely resolution.
What is Financial Disclosure in Divorce?
Financial disclosure in divorce is an essential factor in determining how finances may be distributed following legal separation. This extensive exchange of financial information includes everything of value, such as income, savings, properties, investments, trusts, and more. A transparent discussion about matrimonial finances gives both parties an accurate understanding of the matrimonial pot’s true value and allows everyone to move on.
Full and frank disclosure will help your respective legal teams obtain a complete picture of the situation, which will ensure that you receive the most relevant legal advice possible. This, in turn, will mean that your lawyers are able to present a complete list of your available options — giving you the chance to make an informed choice that is in your best interests. Finally, establishing the full financial facts of the relationship minimises the chances of the settlement being ‘unpicked’ in the future — allowing you to plan for life post-divorce with confidence.
Complete transparency regarding assets goes beyond being an important practical step towards a financial settlement. Laying all of your cards on the table can help to establish a more trustworthy foundation for all discussions, potentially taking the heat out of an emotive situation and facilitating a more open and straightforward dialogue between couples. However, the nature of some relationships mean that these conversations can often become strained or even be unrealistic from the outset. In these scenarios, it’s often necessary to list all finances in a compulsory legal document, known as Form E, which is ordered by the court when a financial remedy application is lodged at court.
What is Form E in Divorce Proceedings?
Form E is a form of financial statement that enables both parties to detail full financial disclosure in divorce. It is a standard document that provides a comprehensive insight into assets at play and is compulsory when court ordered. Form E is so comprehensive that many solicitors use it to establish assets even when it hasn’t been formally requested.
Form E is commonly used in the following situations:
- Ahead of the First Appointment: During financial remedy court proceedings, Form E will need to be completed in advance of the First Appointment. This generally takes place within 3 months of court proceedings being issued.
- Exchanging financial disclosure on a voluntary basis: When both parties are amenable to reaching a financial settlement and are communicating their wishes through their own solicitors.
- During mediation: Sometimes the form, or a version of it, will need to be completed when both parties have entered mediation in order to help reach a financial settlement.
The Information Needed in Form E
Form E asks for the following information and must be completed in full:
- Marriage date
- Number of children/dependents
- Financial resources (including properties, assets, business income and assets, investments, etc.)
- Income and capital needed to maintain your lifestyle
- Any relevant Section 25 factors (including the welfare of children, matrimonial conduct, etc)
To summarise, Form E takes a comprehensive overview of financial disclosure in divorce and touches upon any issues with conduct that could be relevant to an eventual settlement. It details an exhaustive list of existing finances and assets. Completing the form requires providing bank statements, tax records, payslips, business valuation and liabilities, pension details, and more.
When completing Form E it’s important to enlist the assistance of a legal professional who can advise you on a range of matters, from the future of your business after divorce to safeguarding investments and more. This will ensure that the form is completed correctly and any potential issues can be discussed at the time, minimising potential unpleasant surprises and delays.
To read more about the implications for limited companies during divorce proceedings, you can read our blog on the subject here.
Is Financial Disclosure Required for Divorce?
Financial disclosure in divorce is a legal necessity when court orders have been issued towards reaching a financial settlement. In fact, even when court proceedings have not been issued, it’s essential for both parties to establish their finances in order for both sets of solicitors to provide clear and detailed advice to their respective clients. There is a duty of ongoing full and frank disclosure.
It’s impossible for both sides to have true clarity about the finances at stake unless they are willing to provide full and frank disclosure. A common misconception when it comes to financial disclosure is that total transparency over your finances and assets is only required in situations where there is a court order. Even in cases of voluntary financial disclosure, generally a less taxing route to resolution, complete transparency is a non-negotiable duty.
Non-disclosure of assets in divorce is harshly viewed by the courts and could result in lengthy delays, additional stress at an already difficult time, and in some cases, even more severe consequences.
Can I Refuse Financial Disclosure?
Failure to disclose your finances during divorce isn’t advisable, as there is a duty of full and frank disclosure throughout the process. Refusal might prompt significant delays and rising costs. Inaccurate reporting or non-disclosure of assets in divorce could eventually lead to an existing agreement being discarded and even a criminal conviction.
Penalties for non-disclosure of assets in divorce may include:
- Adverse costs order: You are ordered to pay the costs of your ex partner
- Adverse inferences: Your reluctance to be transparent could see the Court siding with your ex spouse and deciding that you have more assets to draw upon in order to satisfy a matrimonial settlement
- Existing Order is challenged: Previous material non-disclosure of assets in divorce could see an existing order being overturned
- Contempt of Court: The Statement of Truth at the foot of Form E clearly states that filling out the form incorrectly and then signing the declaration constitutes contempt of court. This could result in either a fine or criminal conviction. A penal notice, i.e a final warning, can be added to any court order ordering disclosure. If it is ignored then your opposing party can apply for you to be imprisoned for a period.
The possible repercussions for either refusing financial disclosure or intentionally omitting assets can be extremely serious. If any of the above resonates with you then it’s vital that you receive comprehensive legal advice from family law specialists as soon as possible.
Lowry Legal: Putting you First
Lowry Legal is a divorce specialist with extensive experience of representing clients with high net worth. We understand that full and frank disclosure forms the foundation on which divorce involving significant wealth is founded. Whether you’re anticipating a collaborative approach to the end of your relationship or a contested route to the courts, we have the knowhow to guide you towards a timely and positive outcome.
Our commitment to you means that your best interests will remain central to our approach throughout the divorce process. We’ll adopt a practical and plainspoken mindset from the outset to ensure that you fully understand all of your available options and have a clear understanding of the steps towards an eventual resolution.
To speak to one of our specialist divorce lawyers, contact us today, or email enquiries@lowrylegal.co.uk.
