Ending the marriage is a relatively uncomplicated process, now typically conducted entirely online. Legal assistance can be helpful in some instances but most couples complete and despatch the necessary forms at the required intervals without any issues. Dividing the assets can be straightforward process too, but it can also be a complex and time-consuming undertaking too, especially if the couple is wealthy and the courts become involved.
Financial disclosure
A key part of asset division is a full disclosure of each party’s financial circumstances: this is the only way to ensure the assets are divided fairly, in a way that properly reflects each party’s contributions to the marriage. Full, frank and clear disclosure is a legal requirement if you ask the family courts to intervene in your settlement negotiations. Such disclosure must include, for example, a full year’s set of statements for every bank account in your own name, as well as any joint accounts in which you have an interest – and new statements may be required as the case progresses.
Failure to provide such information can legally invalidate the entire settlement, or at the very least, encourage a judge to draw unfavourable conclusions
Each spouse completes a document called a Form E, attaches any relevant supporting documents, and exchanges this with the other side at the start of the negotiations. The information on each is then merged into a joint Schedule of Assets.
In most instances, the settlement agreed by the couple or imposed by a judge will be turned into a legally binding ‘consent order’ (so called because each party consents to it). This will require the accompanying submission of a Form D81, summarising each party’s financial positions.
Also required for submission of the Form E is a self-explanatory Statement of Truth, a simple confirmation that the information included in the submission is true. This places spouses at risk of prosecution for contempt of court if they deliberately omit relevant information. If they are found guilty, they could face a large fine or even a prison sentence.
Alternative dispute resolution
But what if one party does not want to share their financial information? It is worth noting that Form E financial disclosure is only required for the traditional courtroom process. Therefore, if the erstwhile couple has opted for one the various available methods of alternative dispute resolution (ADR) outside a courtroom, there will be no need for full disclosure to reach a binding agreement.
Examples of ADR include:
- Mediation
- Arbitration
- Collaborative law
- Solicitor-led negotiation
But dispensing with full disclosure comes with obvious risks: an uncooperative spouse could conceal funds to which you have a clear claim. If you have instructed a solicitor, he or she will generally make it very clear at this stage that dispensing with disclosure is not in your best interests. If you decide to continue anyway, your lawyer will then typically ask you to sign a disclaimer declaring that you have been strongly advised to pursue disclosure but have chosen not to do so.
Failure to disclose
A failure to fully disclose assets may come to light while divorce proceedings are ongoing or afterwards. There are consequences for the non-disclosing party in either case.
If the non-disclosure comes to light during the proceedings, this will almost certainly be reflected in a consent order less beneficial to the secretive spouse. Even something as apparently straightforward and uncontroversial as closing a bank account can backfire during divorce negotiations. At any other time, you are, of course, entirely free to do whatever you wish with bank accounts in your sole name, but closing an account during divorce negotiations could lead the family courts to conclude you are attempting to conceal funds from your estranged spouse, and this could be reflected in the eventual settlement.
Meanwhile, the consequences of discovery later can be more severe: the entire settlement can be set aside in the event of non-disclosure coming to light, and the party responsible may be required to pay both sides’ legal costs. They may even face prosecution for fraud.
Asset protection
A potentially effective way to protect assets from division in divorce is via a legal agreement with your future or current spouse.
When such a document is signed before a marriage, it is known as a prenuptial agreement. By contrast, a postnuptial agreement is, as the name suggests, signed after a marriage has taken place. Both varieties allow you to specify the division of assets in the event of a divorce – either the entirety of the settlement or certain monies and property only.
Pre- and postnuptial agreements can be an appropriate choice in some circumstances – for example, when one spouse is significantly wealthier than the other. But it is important to note that they will only be upheld by a court if they are signed in clearly fair circumstances – any suggestion that one party was rushed or pressured is likely to lead a family court to disregard the agreement, as is any failure to ensure that the less wealthy spouse received independent legal advice before signing.
Talk to a family solicitor for tailored advice relevant to your particular circumstances.
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