Dishonest Financial Disclosure
When a divorce financial settlement solicitor tells a husband or wife that in order to reach a fair financial settlement, they will each have to provide full and frank financial disclosure they are sometimes greeted with laughter. That’s because a divorcing spouse knows their husband or wife so well that they realise that honesty and fairness isn’t part of their spouse’s vocabulary.
In this article divorce financial settlement solicitor, Robin Charrot, looks at dishonest financial disclosure and what you can do about it.
Not everyone is dishonest
Divorce financial settlement solicitors tend to specialise in complex divorces where one spouse has hidden money or assets or is trying to undervalue assets so the other spouse doesn’t get a fair financial settlement. However, its important to remember that not every husband and wife is dishonest. The vast majority of divorcing couples know all about the other spouse’s income and their savings and property. If you do then there is no need to spend money on divorce solicitors trying to find assets that don’t exist. Your financial settlement solicitor is best focussing on negotiating a fair financial settlement that meets your needs and converting the agreement into a binding financial court order.
Do you think your spouse is dishonest?
A husband or wife can be dishonest about some aspects of their lives but not others. Often you are the best person to know if your husband or wife hasn’t been honest about relationships but is totally upfront about money. Alternatively, you may suspect that your husband or wife has been planning to leave you for a while and you strongly believe that they’ve been managing their financial affairs so you won’t get the financial settlement you are entitled to.
If you think your husband or wife is dishonest (or to put it neutrally ‘ won’t give full and frank financial disclosure’) then it is best to have a discussion with your divorce solicitor to see what financial information can be requested and what follow up questions may need to be asked.
If you just have a strong suspicion of dishonesty but no concrete proof or ‘smoking gun’ then don’t worry. Divorce financial settlement solicitors are experienced in getting to the bottom of financial disclosure and ensuring all assets are disclosed and properly valued before reaching a divorce financial settlement.
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Why do you think your spouse is dishonest
Sometimes you just know your spouse is going to be dishonest in financial disclosure as they haven’t been honest in financial dealings with third parties over the course of your marriage and you think dishonesty is just part of their genetic make-up. In other situations, you may have been warned about the dishonesty by your spouse’s business partner or a family friend.
It is important to understand why you think your husband or wife is being financially dishonest as you don’t want divorce financial settlement solicitors to explore and analyse your spouse’s bank statements or business accounts or ask additional questions about their financial affairs if your views on their honesty is being clouded by your upset about your spouse walking out of the marriage or any of the many other things that a husband or wife can do to aggravate an already difficult and emotional time.
Tackling dishonest financial disclosure
When you split up you are entitled to a fair financial settlement. What’s ‘fair’ depends on your personal and financial circumstances but you can’t reach a financial settlement unless you know the true amount of the family assets in your joint and sole names and those assets are correctly valued.
If you spouse won’t give full and frank financial disclosure on a voluntary basis you will need to start financial proceedings. During the financial case your husband or wife will need to give honest and full information when:
- Completing the standard Form E financial disclosure document and providing supporting paperwork.
- Answering questionnaires about their finances and disclosing additional documents as ordered by the court.
- Speaking to a single joint expert – such as a forensic accountant appointed by the court to value the family business.
- Giving evidence at the financial settlement court hearing.
If a spouse doesn’t comply with disclosure orders during financial settlement court proceedings you can ask the court to:
- Enforce the disclosure order or
- Draw inferences because of a failure to comply with the disclosure order or incomplete provision of information. For example, if the financial disclosure reveals drawings from the business of £80,000 gross per year but documented expenditure on mortgages, cars, holidays etc show outgoings of £110,000 but there is no corresponding debt or use of savings to meet the income shortfall or other reasonable explanation, other than cash syphoning.
Discovering dishonest financial disclosure after a financial court order
Sometimes you just don’t know that the person you loved and trusted has been dishonest with their financial disclosure until sometime after you have agreed a financial consent order or the court has made an order after contested court proceedings. Even if you discover dishonest behaviour after the event, it may not be too late to take action. Divorce solicitors issue a word of warning though – it is easier and cheaper to show dishonesty before a financial order is made as there are no absolute guarantees that you can reopen a financial court order.
If you can show there was dishonest financial disclosure the court has the power to set aside the financial court order it made. Divorce solicitors emphasis the importance of full and frank financial disclosure citing the Supreme Court cases of two ex-wives (Mrs Sharland and Mrs Gohil) who took their cases to the Supreme Court to try to win justice on the basis that their former husbands had deliberately misled them and the court about the true extent of their wealth.
Mrs Sharland and her husband had agreed on a divorce financial settlement. A court order was drawn up by their divorce lawyers and approved by the judge. After the order was approved Mrs Sharland read in the financial press that her husband’s shareholding in his IT company was worth more than he told the court.
Mrs Gohil agreed her divorce financial settlement on the basis of information her husband disclosed: a modest income and no assets. However, Mrs Gohil started a battle to overturn the divorce settlement after it had become apparent to her that her husband’s lifestyle could not be supported by his disclosed assets and income. The husband was later convicted of fraud and money laundering. The evidence in criminal proceedings enabled Mrs Gohil to pursue her claim.
In the cases of Mrs Sharland and Mrs Gohil, the Supreme Court ruled that if a husband or a wife in divorce proceedings intentionally keeps financial information from the court, then the court will presume that a different financial order would have been made if the hidden evidence had been made available at the time.
Deliberately misleading the court can therefore invalidate a divorce financial settlement. That means the financial court order can be changed so dishonesty means uncertainty and extra costs for the dishonest spouse plus the real possibility of the court making a more generous financial settlement to the other spouse.
Suspicions of dishonesty and financial disclosure
If you are suspicious about financial disclosure and believe your husband or wife is being dishonest then don’t negotiate a financial settlement thinking that you can change it at a later date – you may not be able to do so or the costs and timescales may be a deterrent.
If you are concerned that the figures just don’t add up or your spouse is doing some of the classic concerning actions (such as transferring assets to friends or family or closing bank accounts or telling you that the family business is at risk of going under but the order book seems as strong as ever) then speak to an expert divorce financial settlement solicitor so you can understand your options and achieve a fair financial settlement.