What Is Financial Disclosure in Divorce?

What Is Financial Disclosure in Divorce?

The division of marital assets is often the most contentious part of a divorce. While the process can be relatively straightforward in some cases, it becomes highly intricate for couples with complex financial portfolios. 

Financial disclosure is the process by which both parties in a divorce provide a full and honest account of their financial circumstances. This includes all assets, income, liabilities, and future financial needs. It is a legal requirement in the UK and forms the foundation for a fair financial settlement.

Legal Basis:
Full and frank disclosure is required under Form E in financial remedy proceedings. Failure to comply can result in serious legal consequences, including cost penalties and the setting aside of financial orders.

Why Is Financial Disclosure Important?

Without full disclosure, the court - or the other party - cannot assess what a fair division of assets looks like. Disclosure ensures transparency, fairness, protection against fraud and efficient negotiation and settlement. It also helps avoid costly litigation by enabling informed decisions early in the process.

What Must Be Disclosed?

Each party must disclose:

• Current and future income (e.g. salary, dividends, rental income)
• Assets (e.g. property, pensions, savings, investments, crypto)
• Liabilities (e.g. mortgages, loans, credit cards)
• Expenditure forecasts (e.g. living costs, childcare, education)

HOW IS DISCLOSURE ACHIEVED? 

Where there has been an application for a financial order in divorce proceedings, each party must go through the process of completing a document called a ‘Form E’. This is a comprehensive document, similar to a questionnaire in which each party sets out full details about their finances. Documents to evidence this are attached along with the form, these include bank statements, evidence of your investments, property valuations and pension statements, along with documentary evidence such as P60s, payslips, tax returns and company accounts. 

This thorough documentation often aids in the identification of any assets that were not explicitly stated in the Form E. For example, bank statements may show funds transferred to an undisclosed account or income from the sale of a matrimonial asset. 

When Forms E are exchanged, the parties and their legal representatives can properly examine the disclosures. They can submit questions that address any issues raised by the papers. These questionnaires, filed during financial remedy processes, are not intended to be "fishing expeditions"; rather, their objective is to request any missing and genuinely relevant information. 

What If a Spouse Refuses to Disclose?

Non-disclosure can lead to:

• Adverse inferences (the court assumes the worst)
• Penalties or cost orders
• Reopening of settlements (as in Sharland and Gohil)
• Contempt of court proceedings

In serious cases, the court may infer hidden wealth and award a larger share to the honest party.

High-Net-Worth Disclosure Challenges

For HNW and UHNW individuals, disclosure may involve offshore trusts, complex shareholdings, private equity or carried interest, crypto assets, art, jewellery, and luxury assets.

We are the only HNW family law firm with an in-house Financial Forensics department. Our team specialises in identifying, tracing, valuing, and forensically reviewing assets, including businesses, property, and investments. 

If you are a high-net-worth individual going through or considering a divorce, it is crucial to have an accurate valuation of all your spouse’s assets. Whether these assets are held in complex international trusts, hidden within investment portfolios, or concealed through intricate share structures, they must be identified and considered for a fair settlement. 

If you’re unsure how to complete your disclosure or suspect your spouse is hiding assets, our expert solicitors and forensic team can help. We offer a free initial consultation to qualifying individuals.

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