Hiding Assets During Divorce
In divorce and dissolution proceedings, before settlement negotiations can begin, it is vital that both spouses have a full appreciation and understanding of the other’s financial circumstances. Put simply, you need to understand the size of the cake before you can apportion or divide it up.
Accordingly, the courts require that both parties provide what is referred to as ‘full and frank disclosure’ of their finances and assets, spanning back at least 12 months. Such disclosure enables parties to enter into transparent and fair settlement negotiations and furthermore increases the chance of reaching an agreement without the expense of having to go to court.
The disclosure process requires both parties to be open and honest about their finances. However, there are cases where a spouse fails to disclose assets in an attempt to avoid them being split and in the hope that their spouse will get a smaller award.
How are assets hidden
Some of the common ways that assets can be hidden include:
- Temporarily transferring assets such as shares in their own name or savings to third parties such as friends or family members
- Asking their employer to delay the payment of bonuses or commission until after the divorce
- Moving assets off shore
- Placing assets in trust
- Using cryptocurrencies
- If one spouse owns a business they may try and manipulate accounts or under estimate the value of their business interest
- High value items such as expensive jewellery, antiques or gold may be purchased in an effort to reduce accessible cash.
The above is not an exhaustive list.
What to do if you think your spouse is hiding assets
If you believe that your spouse is hiding assets from you and the courts in order to avoid a fair financial settlement, it is essential that you act quickly and seek specialist legal advice.
If you have already instructed a solicitor, it is vital that you inform your solicitor of your suspicion as soon as possible, so that they can take the necessary action. Such action may include:
- Seeking early disclosure from your spouse and for such disclosure to go back further than the usual 12 months, in order to trace movement of assets. If your spouse refuses to co-operate with such a request, you may require the assistance of the court for specific disclosure orders.
- Obtaining assistance from a forensic accountant to help locate and identify your spouse’s assets. A forensic accountant can also investigate discrepancies and inaccuracies in the disclosure provided by your spouse.
What if anything can the courts do
Under the Matrimonial Causes Act 1973 the court has various provisions in order to stop your spouse transferring assets, or to order assets to be transferred back if they have already been transferred. When looking for hidden assets the court has the power to:
- Use search orders to discover whether there are hidden assets.
- Make an order requiring third parties to disclose information about your spouse. This enables a solicitor to obtain documents from banks and organisations such as HMRC.
- Make freezing orders to prevent assets being disposed of.
- Order that already disposed assets be transferred back.
What happens if my spouse is found to have hidden assets
The court takes non-disclosure very seriously and the penalties for hiding assets in a divorce can be substantial.
If a party deliberately fails to divulge the existence of assets during a divorce, this can potentially be considered contempt of court, leading to fines and even imprisonment.
If a divorce is ongoing, the court may order that your spouse pay your legal fees. The spouse hiding the assets may also receive a less favourable financial settlement than they would have been awarded otherwise. The court may make a financial order on the basis that a certain amount of money is available, despite what your spouse has chosen to disclose.
In addition, where assets come to light after an order has been made, the court has the power to reopen the case and set aside the previous order, making a new one in light of the hidden assets.
How can we help
At Prince Evans, we have expert divorce lawyers who can discuss your particular circumstances with you. We deal with both UK and international clients.
Muna Saleem is a Partner and Head of the Family Team at Prince Evans. She has over 15 years of experience in advising clients in relation to divorce and financial disputes.
To speak with Muna call us or email us using the form below and we will contact you back.