How do Divorce Solicitors Find Hidden Assets?

You need specialist legal advice from a divorce solicitor if you suspect your spouse has or will hide assets from you to reduce your financial settlement after a separation or divorce.

Our North West divorce lawyers answer your questions on how they find hidden assets in financial negotiations and court proceedings.

Contact our specialist family lawyers for a consultation on your financial settlement.

Why do spouses hide assets in divorce proceedings?

Concerns about ex-spouses hiding money or property from their partner in financial negotiations and proceedings are common. The newspapers are full of stories about international or multi-millionaire families involved in financial proceedings, with accusations that a husband or wife has hidden assets. However, assets can be hidden when the wealth isn’t vast. In some ways, that is more understandable; a husband trying to safeguard an inheritance received from parents or a wife trying to retain the money she set aside from years of savings.

Our experienced divorce solicitors say that, in their view, the top five reasons spouses don’t comply with financial disclosure and hide assets in financial negotiations and court proceedings are:

1. Sense of entitlement to the asset.
2. Fear that the financial settlement will leave them with reduced wealth.
3. Belief that they won’t be found out.
4. View that everyone does it.
5. Revenge.

Is hiding assets in financial negotiations ever justified?

Attempting to hide assets in divorce negotiations or court proceedings is never a good idea.

Some spouses don’t reveal assets because they are hurt. Perhaps their spouse has met a new partner or, in their view, their spouse has behaved unreasonably, causing the marriage breakdown. A finance lawyer can advise you on whether you can raise the issue of your spouse’s conduct in financial proceedings. However, revenge is never a reason to hide assets.

Entitlement is a common reason for non-disclosure. A view that a spouse is entitled to an asset and it therefore does not need to be disclosed, can arise because of:

1. Inherited assets.
2. Pre-marriage purchased assets.
3. Assets held in discretionary trusts.
4. Being the sole or primary earner during the relationship.
5. Gifted monies through parental or family inheritance tax planning strategies.

Whatever the reason behind the sense of entitlement to the asset, it should be disclosed to the other spouse and the court. The correct procedure to follow is to:

1. Provide full financial disclosure.
2. Argue that specific assets, such as an inheritance, gifted monies or pre-marriage acquired assets, should be classed as non-matrimonial property and should not be shared with their spouse.
3. Put the case that the spouse’s needs can adequately be met by receiving a fair share of the available family or matrimonial assets without recourse to the ringfenced asset.

Divorce lawyers can advise on whether an asset will likely be classed as a family asset and the relevance of needs arguments to your financial settlement. You will need bespoke advice because the court’s approach will depend on several factors, such as:

1. If the asset was shared during the marriage.
2. The extent of the agreed-upon family assets.
3. The standard of living enjoyed during the marriage.

Ten common ways spouses hide assets in financial negotiations:

1. Opening another bank account in their sole name.
2. Taking out cash from their sole account or your joint account.
3. Transferring assets or property to family or friends.
4. Syphoning money from a family business and putting it into a hidden account.
5. Transferring money overseas or buying liquid assets knowing they will be difficult to trace.
6. Investing in Bitcoin or other cryptocurrencies and digital assets.
7. Underreporting their income, such as deferring large commission payments.
8. Not disclosing employment share incentive schemes, such as EMIs.
9. Using shell companies and trusts to hide assets.
10. Buying property or assets in their new partner’s name and having a secret beneficial interest in the property.

Red flags that your spouse is hiding assets from you

Here are some red flags or pointers that your ex-spouse may be hiding assets from you:

1. Change in spending patterns and behaviour, such as frequent large cash withdrawals.
2. Sudden improvement in a relative’s or new partner’s wealth, such as purchasing a property.
3. Rapid deterioration in a spouse’s financial position after the decision to separate, or after you think they have decided the marriage is at an end.
4. Previous history of non-disclosure. For example, in their first marriage or with a business partner.
5. The disclosed assets do not correlate with your family lifestyle.

Financial disclosure and hiding assets in financial court proceedings

In financial court proceedings, a husband and wife must give each other full and frank financial disclosure. That does not always happen. Additional enquiries, such as questionnaires and single joint expert and shadow expert reports, can be commissioned to trace assets. Sometimes a finance solicitor can spot that a spouse is trying to hide money, property or income through:

1. Transferring money from a bank account as cash and saying that the cash has been spent, but opening a secret bank account with the money.
2. Producing incomplete internet transaction histories for bank accounts to avoid revealing entries.
3. Saying that money taken out of a savings account was to repay family debt, but the debt was artificial, with the plan being for the alleged debt to be repaid after the financial proceedings are finalised.
4. Pretending that they do not own a new property. A simple search of the Land Registry can reveal the truth about property ownership.
5. Not disclosing the existence of family trusts or inheritances.

These are just the tip of the iceberg when it comes to hiding assets in divorce proceedings.

How do divorce solicitors find hidden assets?

Specialist divorce solicitors employ a variety of tactics to find hidden assets, including:

1. Starting a financial application so that the court orders financial disclosure.
2. Carefully reviewing Form E financial disclosure.
3. Enforcing orders for Form E financial disclosure.
4. Conducting searches with the Land Registry and Companies House to verify property ownership and company information.
5. Filing questionnaires to ask for additional financial disclosure.
6. Applying for Section 37 injunction orders to stop a spouse from transferring or selling assets or property to friends or family.
7. Where relevant, joining parties to court proceedings, such as trustees of a discretionary trust, a corporate entity, or a family member who says they are entitled to a significant percentage of the equity in the family home.
8. Employing asset tracers and forensic accountants to trace assets and wealth.
9. Asking the court for permission to instruct an expert to analyse specific issues, for example, movements on a director’s loan account.
10. Liaising with experts overseas to trace international assets.

These are just some methods family lawyers use to find hidden assets. At Evolve Family Law, we always discuss the best asset tracing options relevant to your family circumstances.

Should assets be traced in financial proceedings?

A specialist divorce solicitor will consider with you:

1. The cost of tracing hidden assets.
2. The benefits to be gained.
3. Alternatives to asset tracing.

For example:

1. If you can prove your spouse is worth at least 12 million and you are only seeking 5 million to give you a very comfortable lifestyle, is the extra cost justified in proving that your ex-spouse has an additional 1 million in assets?
2. Asking the court to infer that your ex-spouse has additional wealth because their disclosed assets do not support their provable expenditure and lifestyle.
3. If you were married for 12 months and signed a prenuptial agreement after taking legal advice.

None of these examples means you should not trace hidden assets, but they do demonstrate the need to discuss the cost-benefit ratio.

There is no point in running up a big solicitor’s bill or instructing a forensic accountant to pore over company accounts unless the extra work and costs are likely to produce more by way of financial settlement than the additional expenses incurred. That is because you cannot guarantee that a court will order a spouse to pay your costs in tracing assets. It is a pointless victory if extra legal costs swallow up the larger financial settlement because the court either does not make a cost order in your favour, or the order does not cover the full extent of your asset tracing costs.

How Evolve Family Law can help you achieve a fair financial settlement

It is not surprising that there are allegations of hidden assets in divorce proceedings. After all, divorce proceedings often start because of a lack of trust in a relationship. A spouse’s affair can cause a husband or wife to lose emotional and financial faith in their partner. When a separation is imminent or divorce proceedings are started, past actions and financial behaviours can take on a new significance.

At Evolve Family Law, our divorce lawyers work with you to help you achieve a fair financial settlement. That involves tracing all assets after assessing the cost-effectiveness of doing so. We work with you because spouses know their spouses’ behaviour best, and you will potentially have lots of invaluable information to help us ensure you receive the financial settlement you deserve.

Contact our specialist family lawyers for a consultation on your financial settlement.