A Guide to Financial Disclosure in Divorce Proceedings

Navigating financial disclosure can be complicated when you are trying to negotiate who gets to keep the family home, business or pension after a separation.

If you are frustrated with the speed and scale of financial disclosure in divorce proceedings, our family lawyers can help you with expert financial disclosure and settlement guidance

Consult Evolve Family Law Today

What our divorce solicitors cover in this article:

1. When is Financial Disclosure Necessary?
2. Why is Financial Disclosure Necessary
3. Limiting Financial Disclosure in Negotiations and Court Proceedings
4. The Financial Disclosure Process
5. Form E Financial Disclosure
6. Form D81 Financial Disclosure
7. Updating Financial Disclosure
8. Full Form E Financial Disclosure
9. Form E Disclosure and Supporting Documents
10. Properties and Form E Disclosure
11. Financial Disclosure of Company and Business Interests
12. Debts and Liabilities
13. Penalties for Financial Non-disclosure
14. Forcing Your Ex to Provide Full Financial Disclosure
15. Talk to Evolve Family Law
16. Frequently Asked Questions on Financial Disclosure

When is Financial Disclosure Necessary?

You need financial disclosure if you are reaching a financial settlement through:

• Direct discussions with your ex
• Solicitor negotiations
• Family mediation
• Family arbitration
• Financial court proceedings

Why is Financial Disclosure Necessary

Financial disclosure is a crucial first step in negotiating a fair financial settlement because:

1. You both need to know what assets you individually and jointly own and their current value to reach a fair divorce settlement
2. Court rules require limited financial disclosure (D81 form) when the court is asked to approve an agreed financial settlement or convert a mediated agreement or separation agreement into a binding consent order
3. Court rules require standard Form E disclosure in financial court proceedings
4. If full financial disclosure isn’t given, a husband or wife can apply to set aside a court order made by agreement or after a final hearing

Limiting Financial Disclosure in Negotiations and Court Proceedings

You may think full financial disclosure isn’t necessary because:

1. You are splitting amicably and trust your ex
2. You were both open about finances during the marriage
3. You haven’t been married long
4. You both earn a similar amount
5. Neither of you has many assets, so there is nothing to argue about
6. You don’t want to risk your ex asking questions about your assets or their value
7. You signed a prenuptial or a postnuptial agreement    

Financial disclosure is still necessary in all these scenarios. However, a divorce solicitor can look at whether disclosure can be limited in scope while still protecting you and without risking your financial court order being overturned by a later challenge.

The Financial Disclosure Process

In financial court proceedings, there is a set process for financial disclosure.

Court rules require a husband and wife or civil partners to provide financial disclosure by:

1. Completing a Form E document, and
2. Providing standard financial disclosure of specified assets
3. Allowing spouses to ask questions about their ex’s financial disclosure, provided the court assesses the questions as relevant and proportionate
4. Requiring up-to-date asset valuations if the court thinks that valuation reports are cost proportionate

Financial settlement solicitors, family mediators and family arbitrators all suggest using a similar financial disclosure process because without full financial disclosure:

1. Your ex may not agree to a financial settlement because they don’t trust you
2. Your ex could try to have the financial settlement overturned if they discover that you had other assets at the time of the financial settlement or your assets were worth more than you said
3. You could spend time and money on solicitor negotiations or family mediation to try to reach a financial settlement, and that time and money will be wasted if your ex is insistent that they want full financial disclosure

Form E Financial Disclosure

A Form E must be completed by a husband and wife or by civil partners after one spouse or civil partner has applied for a financial order.

When you make a financial application, the court gives dates to:

1. Complete your Form E and exchange the document and supporting financial  paperwork with your ex’s divorce solicitor
2. Exchange questionnaires to ask questions about your ex’s financial disclosure and to ask for additional documents
3. Attend a first directions appointment hearing when the judge decides if questions should be answered and if valuations should be obtained

It is only in rare situations that a directions order can alter the Form E financial disclosure process. For example, where a couple signed a prenuptial agreement and were married for a short period, the spouse wanting to enforce the terms of the prenuptial agreement argues that full Form E financial disclosure isn’t cost proportionate.

Form D81 Financial Disclosure

If you have reached a financial settlement with your spouse through:

• Direct discussion
• Solicitor negotiations
• Family mediation

You need to convert your settlement agreement into a binding financial court order.

You don’t normally need to file a Form E when asking the court to approve a financial consent order, as the court only wants limited information to decide whether the order is fair to both of you and should be approved.

A Form D81 is submitted to court with the agreed financial court order for court approval. The D81 form briefly details both of your assets, income, and liabilities so the judge has enough information to decide if the order sought is fair.

Updating Financial Disclosure

Your financial position and asset values can change. For example, your shares may significantly gain or fall in value.

Court rules provide an ongoing obligation to update financial disclosure if circumstances change. This could include a salary increase, bonus payment, redundancy or a decision to move in with your new cohabitee.

If you are unsure whether a change in circumstances needs to be disclosed, it’s best to speak to a financial settlement solicitor. If you don’t report a significant change, such as an offer received to buy unlisted shares in a family business, then when your ex-partner discovers the non-disclosure, they could ask the court to:

1. Make adverse inferences about the non-disclosure if it is discovered before the court makes a financial court order, or
2. Review the final financial court order because it was based on inaccurate or out-of-date financial disclosure

The duty to provide full financial disclosure continues until a financial settlement is reached by the court making a financial court order by agreement or after a contested final hearing.   

Full Form E Financial Disclosure

The Form E is prescriptive, so you can’t adjust your financial disclosure because you don’t think an asset is relevant.

It’s understandable to be concerned about how to fill in the Form E and the impact of full financial disclosure on the size of the settlement. Your financial settlement lawyer will advise you on full disclosure and:

1. Whether an asset is likely to be treated as a family asset or non-family asset by the court
2. The relevance of your prenuptial agreement or postnuptial agreement
3. How the court will view and treat pre-marriage acquired assets, such as a family business, property or pension
4. The relevance of post-separation assets, such as an inheritance or large bonus
5. How assets such as discretionary trusts are treated in financial proceedings and the relevance of income or capital distributions during your marriage   

Form E Disclosure and Supporting Documents

Form E disclosure requires information about both your personal and financial circumstances.

Personal information includes:

1. Your age
2. Where you live and your housing plans
3. Whether you are in a new relationship and plan to cohabit or remarry
4. Your health and its impact on you

Financial information includes:

1. Properties
2. Bank accounts and investments
3. Income
4. Pensions
5. Company shareholdings and business interests
6. Debts and liabilities

Properties and Form E Disclosure

All property that you own or have a legal or beneficial interest in must be disclosed. This includes:

1. Jointly owned and sole ownership
2. Where you have a beneficial interest through a deed of trust or cohabitation agreement
3. Property that you say isn’t relevant to your financial settlement, such as your parent’s home transferred into your name as part of an inheritance tax or care home fee strategy
4. Property you own or have an interest in with a former partner
5. Buy-to-let property or investment property
6. Property bought before your marriage
7. A family home or holiday home in the UK or overseas
8. Property acquired through discretionary trust arrangements
9. Property where there is no equity as you have a 100% mortgage or second loans

Form E Disclosure of Bank Accounts and Investments

Your Form E must include details of all:

1. Bank accounts
2. Building society accounts
3. Investments, shares and savings
4. ISAs
5. Cryptocurrency
6. Bonds

Disclosure is required if the account or investment is in your sole name or jointly. Full disclosure includes dormant accounts.

Income Disclosure in Financial Settlements

You may have questions about what income must be disclosed when negotiating a financial settlement or when responding to a financial application. Income is anything that needs to be reported to the HMRC as falling within their income rules.

Income includes:

1. Salary from employment
2. Overtime payments
3. Bonuses including guaranteed and performance-related bonuses
4. Commission
5. Share options
6. Benefits in kind
7. Deferred income agreements
8. Promotions, forthcoming salary increases and delayed payments
9. Self-employed income, including company director income and share dividends
10. Income from side hustles and secondary employment
11. State benefits
12. Income from investments, including ISA interest and dividends and non-ISA investment income
13. Property rental income including buy-to-let and second holiday home rental income

Pensions and Financial Disclosure

Pensions are complicated or can be hard to trace. That’s why you may be tempted to ignore an old pension or to think it isn’t worth the hassle to disclose an old work pension or to ask questions about your husband’s workplace pension.

Disclosure rules say that all pensions must be disclosed, including:    

1. Private pensions
2. Current and any former workplace pension schemes
3. State pensions
4. SIPPs – self-invested pensions
5. SSAS company pension schemes

For every pension you hold, you need to disclose the Cash Equivalent Transfer Value. The CETV may not be a true reflection of the pension’s value. That’s why it may be best to get an actuarial report to consider the various pension schemes, their objective value, the pension offsetting figure and the pension sharing order percentage figure to achieve parity of pension income on retirement.

The percentage figure may not be 50% because of your ages or pension yields. Alternatively, equal pension income in retirement may not be reasonable depending on your circumstances, such as a short marriage.

Financial Disclosure of Company and Business Interests

In addition to disclosing any listed shares, you also need to disclose unlisted shares in a family business as well as partnerships or sole trader businesses.

Business disclosure should include:

1. Company or partnership accounts
2. Details of all shareholdings or partnership interest
3. Details of any loans, such as a director’s loan.
4. Best estimate of the value of the business interest

You may want the court to order a business valuation by an accountant to accurately assess the value of the business so you know the business’s likely net worth and can negotiate a fair financial settlement.

Debts and Liabilities

When you are completing financial disclosure, it can be easy to forget to list all debts, including:

1. Bank overdrafts
2. Credit cards
3. Store cards
4. Loans such as furniture or car loans
5. Secured loans on property or unsecured loans
6. Money owing to family and friends
7. Outstanding tax, such as income tax or capital gains tax
8. Any outstanding legal or other fees

For each liability, you need to provide:

1. Evidence of the debt
2. The outstanding balance
3. The loan repayment terms

Penalties for Financial Non-disclosure

There are repercussions if you or your spouse doesn’t disclose an asset in financial settlement negotiations or court proceedings, including:

1. Your spouse may refuse to settle because they don’t trust you
2. The court could order more extensive financial disclosure
3. A judge could order committal for contempt of court
4. The court could make adverse findings for lack of full and frank financial disclosure
5. The court could make a cost order
6. You or your ex could apply to the court to set aside the financial court order because of the non-disclosure

The court can set aside a final court order if the financial non-disclosure was either fraudulent or an error. If the failure to disclose wasn’t fraudulent, the court will only set aside the order if the judge would have made a substantially different financial court order if there had been full financial disclosure.

Forcing Your Ex to Provide Full Financial Disclosure

If you are struggling to get financial paperwork from your ex or don’t believe that their disclosure is the full picture, our divorce solicitors can help you look for:

1. Undisclosed bank accounts, savings, or income
2. Undervalued assets
3. Diverted income, such as deferred bonuses or accounting if your ex is self-employed
4. Assets transferred to friends or family
5. The transfer of assets overseas, including the use of offshore accounts and trusts
6. Use of digital assets, such as cryptocurrency, to try to hide assets

A divorce lawyer can look at your concerns and the basis for them and advise on how best to pursue full financial disclosure, weighing up the costs and potential benefits.

Talk to Evolve Family Law

If you are struggling to get financial disclosure from your ex, or unsure if your ex has told you everything or worried about how to fill in your Form E, then the specialist financial settlement lawyers at Evolve Family Law can help you with:

• Financial settlement negotiations
• Legal advice and mediation support
• Court representation in financial remedy proceedings
• Form E and financial disclosure advice
• Reviewing your ex’s financial disclosure and advising on options
• Advice on freezing injunctions if your ex is dissipating assets
• Advising on financial settlement after full financial disclosure has been completed

If you are thinking about a separation or are in the midst of a divorce, then our family law solicitors can help you by expertly guiding you through the financial disclosure process and helping you secure a fair financial settlement.

Consult Evolve Family Law Today

Frequently Asked Questions on Financial Disclosure

What happens if my spouse won’t complete a Form E?

You need to apply to court for a financial order if you are in negotiations and your ex won’t provide full financial disclosure, or asks you to rely on their asset values without supporting paperwork. Court rules will require them to file a Form E and to cooperate with the disclosure process.

Does my inheritance need to be disclosed?

It depends. If you are a named beneficiary in a Will but you don’t expect to receive an inheritance imminently, then you don’t need to disclose the potential inheritance. If you are due to receive an inheritance soon or have received it, then you must disclose it even though you may want to argue that the inheritance should be ignored when working out a fair financial settlement.

Can I ignore financial disclosure requests as I signed a prenuptial agreement?

No, you shouldn’t ignore disclosure requests. Your lawyer will need to consider the wording of the prenuptial agreement and the extent of the disclosure being sought and explain your options. Ignoring requests and not engaging will probably result in your ex applying to court for a financial order.

Do I need to disclose a family trust if I haven’t had any money from it?

Yes, if you are a named beneficiary in a discretionary trust, you need to disclose its existence even if you haven’t received any income or capital from the trustees and may not do so in future. The position is different if the trust is in a Will and the testator has not passed away.

It’s always best to speak to a family finance lawyer about the scope of the financial disclosure required when there are trust interests. Too much information can lead to unrealistic expectations. Too little information could result in your ex successfully applying to overturn a financial court order if it was made without revealing the existence of the discretionary or overseas trust.

Does my ex need to disclose their bonus?

Yes, your ex must disclose their bonus as part of the requirement to provide full financial disclosure. The court may treat the bonus payment differently to their regular income, but it must still be disclosed.

What are adverse inferences in financial proceedings?

If your ex refuses to provide financial disclosure, or you can show that they didn’t provide full financial disclosure when filling in their Form E, the court can draw adverse inferences. An example of an adverse inference is the court finding that your ex has undisclosed cash savings because their personal or business bank accounts show that over time cash was syphoned off, although you can’t trace where the money was put.

Consult Evolve Family Law Today