Unravelling Family Finances – Financial Disclosure

Financial disclosure is one of the key stages of achieving a financial settlement following divorce. This article looks at the importance of disclosure and some of the key elements involved in this part of the divorce process. When it comes to moving on from divorce, one of the key aspects that must be addressed is finances. Over the time that a couple is together, finances will usually become intrinsically linked – from paying for bills and living arrangements to contributing to childcare fees. Where a marriage has been long-standing, there can also be other factors involved, including where one spouse becomes the main ‘breadwinner’ and the other taking a step back in their career to assume other household duties. In order to achieve a fair financial settlement following a divorce, it is necessary for all matrimonial assets to be put on the table for division. This process is known as financial disclosure and involves each party disclosing to the other all of their individual finances – assets and liabilities. Reaching a financial settlement also includes deciding how you’re going to divide pensions, any property, savings and investments. Contrary to some people’s understanding, very few assets are excluded from consideration for divorce.  It may be that inheritance, family businesses and property purchased as a single person would be assigned as non-matrimonial assets, but evidencing the timing of when these were acquired would be required. In order to achieve a consent order, which makes your financial settlement legally binding, the court requires you to have a full and open financial disclosure. The importance of a consent order and full financial settlement was discussed in this previous blog. Essentially, without reaching this key stage, there is the potential for your ex-spouse to make a financial claim against you at any stage in the future. Furthermore, if it is proven that one party has not made a full disclosure at any point in the future, a financial settlement could be challenged down the line. As this will ultimately be deemed a contempt of court and possibly fraud, this also carries a risk of being liable for legal fees, a fine or, ultimately, imprisonment. Should a spouse suspect that one party is attempting to conceal assets, the process of fairness and honesty can be undermined – often resulting in animosity between the parties. Whilst steps can be taken to enforce full disclosure, i.e. appointing a third-party expert such as a forensic accountant, this will often incur a significant cost and will usually result in court proceedings being prolonged unnecessarily. Untangling finances can often be one of the trickiest and most complex parts of a divorce. Even where a divorce begins on good terms, discussions around money can lead to arguments and a breakdown in communication. Having the guidance and support of a solicitor who is experienced in dealing with financial remedy can go a long way to achieving a full and fair settlement. Anthony Jones is a Director, Head of Family and a Resolution Accredited Specialist. For more information, please contact him on 01457 761320 or email anthony@odonnellsolicitors.co.uk