The importance of full disclosure of assets in divorce proceedings
With as many as 42% of all marriages in the UK ending in divorce, the break-up can be a traumatic time for all concerned. It brings with it the need to make financial arrangements that can have ramifications for both parties years after the settlement is made.
When a marriage comes to an end and divorce and financial proceedings are started, both parties are required to exchange “full and frank” financial disclosure. This means that they must be entirely open about all aspects of their finances including their income, property, other capital assets, pensions and debts. Judges are keen to stress the importance of this duty. It is established law that where there is material non-disclosure, the court has the power at a later date to set aside an Order or Agreement based on the lack of material information.
When it comes to sorting out a couple’s finances, emotions can be running high, and it isn’t uncommon for either party to have concerns that their spouse may not be entirely honest about their financial situation, and might be concealing assets. Sometimes there can be a genuine oversight, other times there can be a deliberate attempt to hide or undervalue assets. It’s at this point that legal advice can be particularly important. We can cast an experienced eye over a spouse’s disclosure and help ensure that the assets are all correctly valued.
The importance of getting the detail right
One the disclosure process is complete, an agreement can be reached that forms the basis of a financial court order. It is important to be aware that husbands or wives who attempt to hide the true extent of their wealth at the time of their divorce could find their financial settlements set aside on the grounds that relevant material disclosure was not provided at the time.
Back in 2015, successful appeals were made by Alison Sharland and Varsha Gohil in the Supreme Court. Both wives were given leave to seek larger pay-outs as their former spouses hadn’t made full disclosure of their assets at the time their financial arrangements were made.
Ms Sharland believed that the £10m settlement she accepted from her software entrepreneur husband in 2010 represented half his wealth. It later transpired that he had lied about the value of his company, estimating it at £47m, when the financial press put its worth at around £600m.
Ms Gohil was led to believe that her settlement was fair, and accepted a car and £270,000 when she divorced her husband in 2002. In 2010, he was convicted of money laundering and jailed for 10 years. At his criminal trial the evidence showed that he had failed to disclose the true state of his finances at the time of the divorce.
This judgment overturned previous court rulings which had found that wives had to settle for less, even though their husbands had deliberately concealed their true wealth. This ruling sent a clear message that the courts won’t tolerate misrepresentation; full and frank disclosure must be provided by all parties. Those who make false declarations could find themselves returning to court as their former spouses will seek to pursue a new and fairer settlement.
Here to help
Our Family team are on hand to answer any questions you may have. To arrange a confidential discussion please call us on 0330 221 8855, or contact us online.