Keeping Money Secrets During a Separation or Divorce

In this blog, our family law solicitors examine what happens if you keep financial secrets during a separation or divorce.

Contact Evolve Family Law Today for Expert Family Law Advice.

Reasons for hiding money during a relationship

There are many reasons why someone might hide money or not reveal their financial situation whilst in a relationship, such as:

1. Wanting to build up a safety net of savings that their partner won’t spend, so there is a rainy-day savings fund in case of redundancy or a large unforeseen bill, such as replacing the boiler.
2. Feeling the need to save money so that there is an escape route from an abusive relationship where the partner secreting the money is afraid that without the hidden money if it will be impossible to leave their controlling partner.
3. Hiding credit card debt or loans because you know that your partner will worry about the debts.
4. Feelings of embarrassment about having incurred debt. In some cases, the debt may have been incurred before the new relationship, and it now feels ‘too late’ to mention it.

If a couple decides to separate, it can be challenging to reveal financial secrets that were kept during the relationship. However, when negotiating a financial settlement, there is an obligation to provide full financial disclosure.

Financial secrets and separation, and divorce  

At Evolve Family Law, our divorce solicitors will ask questions about your finances and those of your spouse to provide the best advice on financial settlement options. Sometimes people are reluctant to mention undisclosed credit card debts or loans, as their husband or wife doesn’t know about them. However, it is essential to do so as the debts may impact your ability to take over the mortgage on the family home or secure another mortgage to purchase a new property.

In cases where there is debt, then in financial court proceedings, the court rarely undertakes a forensic exercise into how the debt was incurred and whether, for example, you should have bought the shoes or motorbike. Instead, the court will ask:

1. Is the debt family debt– in other words, although the debt was hidden from a husband or wife, was the loan or credit card money used for the benefit of the family?

1. What impact does the debt have? The court will want to know if the debt will prevent a husband or wife from buying another house, staying in the family home, or meeting their other needs.

In addition to debt and divorce, when it comes to financial disclosure on separation or divorce, there is an obligation to provide complete and frank financial disclosure of all your assets. That includes secret bank accounts that your husband or wife doesn’t know anything about, or money given to a family member to ‘hold’ for you, or cash that you keep.

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The consequences of not providing full financial disclosure

Failure to provide full financial disclosure after a separation or divorce may mean:

1. Your spouse will not go to family mediation to reach an agreed financial settlement, or the family mediator may say that mediation is not suitable as full financial disclosure is a requirement for mediation.
2. Your spouse may start financial proceedings so they can get an order requiring you to file a Form E financial disclosure document and supporting paperwork, and can ask additional questions about your finances and transactions.
3. Your spouse could ask the court to make additional disclosure orders, ask for valuations of assets such as the family home or a family business and make Section 37 injunction orders to prevent the sale or transfer of assets to third parties.
4. The court could draw inferences or make findings against you in a financial settlement court hearing. For example, if your family businessgenerates cash but according to your accounts, you receive an income that amounts to less than your essential outgoings (mortgage payments, utility bills or other known expenditure), then the court could make inferences or findings against you.
5. Any financial settlement recorded in a separation agreement or in a financial court order could be overturned later if it is discovered that the agreement or order was made without you having provided full financial disclosure.

Therefore, whilst there may be many reasons why you would want to keep things secret during a relationship, when it comes to a separation or divorce, there are many compelling reasons why you should provide full financial disclosure.

Manchester and Cheshire Divorce and Financial Settlement Solicitors

Evolve Family Law specialises in family law, divorce and financial settlements. If you need advice on your divorce and financial settlement options, our friendly experts can help.

Contact Evolve Family Law Today for Expert Family Law Advice.