Do I need to give financial disclosure?
For advice about your best financial settlement options after a separation or divorce or representation in financial court proceedings call the specialist family law team at OTS Solicitors on 0203 959 9123 or complete our online enquiry form. Appointments are available by video or phone call.
What is financial disclosure?
When you separate or divorce and start or respond to financial court proceedings you need to provide financial disclosure as part of the financial court process. The court requires you to complete a standard form (referred to as a Form E) and provide standard paperwork (company accounts if you own a business, twelve months bank statements etc). Once financial disclosure has been exchanged additional questions can be asked (in a questionnaire) and extra documents can be requested.
Is financial disclosure only necessary in financial court proceedings?
If people don’t want to give financial disclosure, they often think that they can avoid doing so by reaching a divorce settlementby agreement or using family mediation. It isn’t that simple because:
- In solicitor negotiations a divorce solicitor will expect financial disclosure and won't recommend a financial settlement until they are satisfied that there has been adequate financial disclosure. The financial disclosure could take place by voluntary exchange of Form E and supporting documents.
- In family mediation financial disclosure is expected and if one party to the mediation won't provide it the mediator may say that mediation isn’t appropriate
- Agreed settlement. Even if you reach a financial settlement without financial disclosure (for example, through direct discussions, solicitor negotiations or family mediation) if you want an agreed financial court order to ratify your agreement and to give you financial protection from further financial claims you will have to disclose your financial circumstances (in a form called a statement of information) to get a judge to approve an agreed financial consent order. Without the security of a financial court order, you risk future financial claims.
What happens if you don’t give financial disclosure?
If you don’t give financial disclosure, then there are several potential consequences:
- Solicitor negotiations or family mediation could breakdown resulting in your husband or wife starting financial court proceedings.
- If you refuse to provide financial disclosure as part of the financial court process the court can make orders against you requiring financial disclosure. You will be in contempt of court if you breach the order.
- At the final hearing of the financial application the court could draw adverse influences from your failure to provide full financial disclosure or if the court believes that your financial disclosure is inadequate.
- If you reach an agreement with your spouse, the court could refuse to approve the agreed financial consent order without your providing the minimum information required in the statement of information document.
- Your spouse or former spouse could seek to overturn a financial court order made after a contested court hearing or by agreement if it is later found that you did not give full and frank financial disclosure.
What do you have to disclose in divorce settlement financial disclosure?
Financial disclosure doesn’t just cover what you own in your name (or assets held in trust for you, or assets owned jointly with third parties) but also includes disclosure of any debts and liabilities, your income and your housing and other plans and projected budgets and future assets (your pension or potential inheritance if the inheritance is foreseeable).
Financial disclosure should include:
- Details of your income from all sources with financial disclosure of your salary slips, P60 and other evidence as relevant, for example, tax return.
- Details of your assets including property, shares, savings, shares in listed and private companies, monies owed to you, assets transferred to third parties and held on trust for you, bitcoin etc.
- Pension valuations.
- Bank and building society statements for the preceding twelve months – you may have to disclose statements for a longer period if ordered to do so.
- Details of any trusts that you are a beneficiary of, including discretionary trusts.
- Your debts and liabilities, for example, mortgage redemption statement, credit card debt or monies owing to the Inland Revenue because of your involvement in tax schemes and subsequent HMRC investigations.
- Your current and projected outgoings and housing plans. An intention to cohabit with a partner is relevant as it may halve or substantially reduce your housing costs and other outgoings.
Formal valuations of some assets may be required, for example, the family home, an overseas holiday home, a caravan, a buy to let property portfolio, a property held in a SASS pension fund, or private shares in a family company. Tax advice may also be needed so that you only include the net value of the asset, after considering the tax consequences of sale or disposal or transfer of an asset as part of any financial settlement.
What happens after financial disclosure has taken place?
Financial disclosure is normally exchanged and then reviewed by your divorce solicitor. They will ask any necessary extra questions or request missing or relevant additional paperwork. After financial disclosure is complete you will then consider if all the assets disclosed are ‘marital’ assets or if some are ‘non-marital’ assets. Both types of asset must be disclosed, and you can then either agree or the court can rule on whether an asset is a marital asset or not. An example of a marital asset is normally the family home. An example of a non-marital asset is an inheritance received after your separation or kept ring fenced from your husband or wife in a separate bank account.
Once you have worked out what are the marital and non-marital assets you and your divorce solicitor need to work out if there can be a fair financial settlement reached, that meets reasonable needs, without recourse to the non-marital assets. If you can't reach an agreement, then the court can be asked to decide on a fair financial settlement.
Online and London based family and divorce settlement solicitors
If you need legal advice on financial disclosure, negotiation help with your financial settlement or robust representation in financial court proceedings call the specialist family law team at OTS Solicitors on 0203 959 9123 or contact us online. Appointments are available by video or phone call.