The importance of being earnest (in financial proceedings)
Failing to declare all of your assets during a divorce can not only end up costing you more, but also result in a significantly different division of the assets.
We have recently seen a number of high-net worth cases where the Courts overturned the original Financial Order or settlement on the basis that certain assets (such as bank accounts or investments) were not disclosed during the process and, as such, a different Order should be made or settlement reached. For example, only last week we saw a successful challenge of a mutually-agreed settlement which was set aside on the basis that the wife, who had considerable commercial interests, had not disclosed information relating to her business, and that this non-disclosure made a substantial difference to the settlement which was reached.
As an initial step when dealing with their finances, parties undertake an exercise involving the disclosure of their business and personal assets, income and liabilities to their spouse. This information is normally collated in a comprehensive financial statement known as Form E, this being a document going through each of these matters in detail and enclosing various financial documents as evidence, such as bank account statements.
When undertaking this exercise, it is a long-established principle that the parties' disclosure must be full and frank so that the entire extent of their finances is made available to the other party and their legal representative. This extends to any business interests, even where there might the information might be commercially sensitive or subject to a contractual duty of confidentiality. This is important so that the entire pot of the matrimonial assets can be calculated, and then a suitable settlement either negotiated or determined by the Court at a Hearing.
Issues can occur where, whether inadvertent or intentional, a party's disclosure omits an asset or liability which materially changes the parties' finances and the effect of this omission is that the settlement or Order is substantially different to that which would have otherwise been reached. In these circumstances, the party who was not aware of the information and then later discovers it can make an application to set aside the settlement or Order and, if the "substantial difference" threshold is crossed, the Court is likely to set it aside.
The importance of full and frank disclosure should not therefore be under-estimated. This process can be complicated and time-consuming, particularly where parties do not have legal assistance or where the matter involves, for example, property interests, extensive investment assets, or complicated Trust structures (to name a few of the potentially complex financial arrangements which must be disclosed during the process).
If you have any questions about your financial disclosure or in relation to your divorce in general, the Blake Morgan Family team has extensive experience of such matters and will be able to guide you through the process. We are pleased to offer a 50% discount to new clients for an initial consultation in relation to divorce proceedings. Please contact us for further information.