Financial Disclosure in Divorce Proceedings: Why It Matters

Once you have made the difficult decision that your marriage has come to an end, one of the next steps is determining how the finances will be divided between you and your former partner. Before any informed decisions can be made, it is essential to establish what assets, liabilities and income exist.

What Is Financial Disclosure?

Financial disclosure is the process by which both parties exchange detailed information about their financial circumstances. This includes all assets, debts, income and financial resources held either individually or jointly.

The most common method of providing financial disclosure is through a document known as a Form E. This is a comprehensive financial statement that requires each party to set out details of their income, property, savings, investments, pensions and liabilities. Supporting documentation must also be provided, such as bank statements, mortgage statements, pension valuations and other relevant financial records.

Where financial remedy proceedings have been issued, both parties will be required by the court to complete a Form E. However, even when negotiations take place outside of court, many separating couples choose to exchange Form E documentation voluntarily. Although the process can seem time-consuming, it provides the most complete picture of each party's financial position and helps ensure that any agreement reached is based on accurate information.

While a more limited disclosure process is possible, it is not generally recommended. Without full and frank disclosure from both parties, it can be difficult to assess whether a proposed settlement is fair and reasonable.

What Happens After Financial Disclosure Has Been Exchanged?

Once both parties have exchanged their Form E documents, they will have the opportunity to review the information provided and raise any questions or request clarification where necessary.

It is also common for further steps to be taken to establish the value of certain assets. For example, if there is disagreement about the value of the family home, the parties may jointly instruct an independent surveyor to prepare a valuation report. Alternatively, they may obtain several market appraisals from local estate agents and agree an appropriate valuation based on those figures.

When both parties are satisfied that full disclosure has been provided and the value of the assets has been established, discussions can then focus on how those assets should be divided.

What If I Suspect My Former Partner Is Hiding Assets?

As part of the financial disclosure process, parties are usually required to provide at least 12 months of bank statements for each account held in their name. This can make it more difficult for someone to conceal assets or undisclosed accounts, as transactions often reveal the existence of other financial arrangements.

In certain circumstances, additional bank statements covering a longer period may be requested. However, there must be a legitimate reason for seeking this information. The court is generally reluctant to approve requests that amount to a "fishing expedition" without evidence that further disclosure is justified.

If you believe your former partner has failed to disclose assets, it is important to raise your concerns with your solicitor. Where sufficient evidence exists, the court has the power to draw adverse inferences against a party who has not provided full and honest disclosure. In practice, this means the court may conclude that the undisclosed assets exist, attribute a value to them, and take that value into account when deciding how the remaining assets should be divided. This can result in the non-disclosing party receiving a reduced share of the known assets.

What If My Former Partner Refuses to Provide Financial Disclosure?

If one party refuses to provide information about their finances voluntarily, it may be necessary to commence court proceedings.

Once financial remedy proceedings have been issued, the court can order both parties to provide financial disclosure by a specified date. Failure to comply with the court's directions can have serious consequences and may result in costs penalties or other sanctions.

It is important to remember that financial remedy proceedings are conducted in private. The financial information disclosed during the process is only accessible to the court, the parties involved, their legal representatives and any experts instructed within the proceedings.

The Importance of Full and Frank Disclosure

Financial disclosure is a crucial part of the divorce process. It ensures that both parties have a clear understanding of the matrimonial finances and allows informed decisions to be made about any settlement. Providing complete and accurate information at an early stage can help avoid disputes, reduce delays and increase the likelihood of reaching a fair outcome.