We all know that divorce tends to be a contentious and emotionally charged affair, especially when it comes to the subject of who gets what financially. However, as difficult as it may be, the importance of transparency and honesty from both parties involved is essential if a fair divorce settlement is to be achieved. Central to this process is something called financial disclosure, which is a legal obligation that ensures all relevant financial information is presented to the court during divorce proceedings so that a fair decision can be made when separating both divorcees’ finances. Below, we’ve outlined some of the essential steps of financial disclosure so that you can be prepared for what to expect in this domain if you are considering a divorce.
Financial Disclosure: The Basics
In a nutshell, financial disclosure involves the comprehensive sharing of financial details by both parties in a divorce. This process is crucial in determining how assets, liabilities, and other financial resources are to be divided, with the goal of ensuring that the settlement is equitable by considering the financial circumstances of each party. In England and Wales, this process begins with the completion of Form E, a standardized document that requires detailed information on all financial assets, including but not limited to: properties, income, investments, liabilities and expenses, which both divorcees must fill out. Note that under UK Family Law, both parties have a legal duty to provide full and frank financial disclosure. This means that both parties must be completely transparent about their financial situation, even if some aspects may not be in their favour. Any attempt to conceal assets or be untruthful about one’s financial status here can result in serious legal consequences.
Unless you are familiar with the legal system, it is generally advisable to work with a family law solicitor for your financial arrangements during divorce. Your solicitor can help in gathering necessary documentation, advising on what needs to be disclosed, and ensuring that all information is presented clearly and accurately so that you stand the best chance of achieving a favourable outcome in court. Solicitors can also help to enforce the legal and ethical obligations tied to disclosure, preventing the opposing party from hiding any assets they may be trying exclude from divorce proceedings.
Which Essential Financial Information Should Be Disclosed
The scope of financial disclosure is extensive, covering various aspects of an individual’s financial situation. Both parties must provide information on:
- Income: All sources of income, including employment, self-employment, rental income, and investments.
- Assets: Details of properties, bank accounts, pensions, investments, business interests and personal belongings.
- Debts: Information on mortgages, loans, credit card debts, and other liabilities.
- Expenses: Regular monthly bills, discretionary spending, and other outgoings.
- Pensions and Retirement Plans: Pension funds and other retirement benefits are also essential aspects of disclosure.
The Court’s Role in Financial Disclosure
Once financial disclosure forms and supporting documents have been exchanged by both parties, your solicitor will go through the other party’s disclosure with you. Each party then has the opportunity to be able to seek further clarification from that party concerning their disclosure, if required.
After both parties are satisfied that they have been provided with full and frank disclosure from the other party, you can choose to enter into negotiations to discuss how the financial assets should be divided between you. If the negotiations result in reaching an agreement, our solicitors can assist with preparing a financial Consent Order for you.
If you are unable to reach an agreement and your matter progresses all the way to a Final Hearing, the Judge will have considered both parties’ financial disclosure in full to have an accurate understanding of the asset base. Once the Judge has all of the required disclosure, they are then able to make a final decision about the division of assets, spousal maintenance, and any other financial matters in order to achieve a fair settlement that allows both parties to move forward in financially stable manner.
Potential Difficulties To Be Aware Of In Financial Disclosure
It goes without saying that people can become very defensive or even aggressive whenever money comes into the equation, so it is important to be prepared for a variety of potential complications in financial disclosure. These include:
- Privacy Concerns: Parties may be reluctant to disclose sensitive financial information. However, the legal requirement for transparency outweighs privacy concerns in court proceedings.
- Concealment of Assets: In some cases, one party may attempt to hide assets, which can lead to unfair outcomes. Family law solicitors often work with financial experts to uncover hidden assets and ensure full compliance from both parties in providing full and frank disclosure.
- Emotional Strife: Divorce proceedings are often highly emotional by nature, which may hinder the open exchange of information. Solicitors can also play a critical role here in maintaining focus on legal obligations despite any emotional challenges that may arise for their clients.
Why Transparency and Integrity Is Crucial
Although it may at first seem daunting, striving for the utmost transparency when going through divorce proceedings can have multiple positive effects. Full and frank disclosure not only facilitates fair settlements but also promotes trust and credibility in the legal process. When both parties are transparent, it can lead to more amicable negotiations and even out-of-court settlements, both of which can minimise conflict and the legal costs of prolonged litigation. Complete disclosure also reduces the likelihood of any disputes arising after the settlement has originally been made, as all financial information is already ‘on the table’. Conversely, refusing to disclose the required information can result in serious legal repercussions, including penalties or unfavourable outcomes for your case.
Financial disclosure is a cornerstone of achieving a fair divorce settlement in the UK and our solicitors at Grayfords are highly skilled at navigating this process to achieve the best outcomes for our clients. If you are considering a divorce, our team can guide you through the legal intricacies of the process step by step so you can move forward with financial stability and peace of mind. Don’t hesitate to call us today on 020 7100 6100 and book your free consultation to find out more about how we can help.
